Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. – Ayn Rand, Russian-American writer and philosopher
A staggering portion of the population here in the Philippines don’t have sufficient financial literacy. In fact, only one of four Filipinos are financially literate, according to Standards and Poor’s (S&P) Global Financial Literacy Survey in the Philippines. This could translate to having bad spending habits that prevent Filipinos from attaining financial stability. Some of these spending habits are ingrained in our culture so much so that we unknowingly commit them. In this article, we will address some of the most common bad spending habits by Filipinos and offer some tips on how to get rid of them.
1. Mañana Habit
When we think of Mañana habit, we mostly relate it to mundane tasks such as household chores and school works. However, this habit of putting off something that can be done now and doing it a later time very much applies to our finances as well. This would explain why most of us do not have emergency and retirement funds. Likewise, some couldn’t cultivate the culture of saving for the rainy days for we are so bound with the dangerous mindset that everything will just work out fine in the end.
When actual emergencies arise, our finances are not ready and so most people are forced to avail loans to solve the problem at hand. This then creates a cascade of dilemmas that would put us into a situation where it would be even harder for us to save.
Building a proper financial plan and the habit of saving and investing provides a solution to this vicious cycle. Others may have time constraints in plotting their financial plan. It would be wise to seek professional help from financial consultants. Registered financial consultants will be able to come up with the right financial plan to get you started on the right track.
2. Falling into the Sales Trap
Wonder why during paydays, people flock to the mall? Sales, that’s right! Businesses have long figured out that when Filipinos have money, you can almost always expect to find them in malls, among some other places. Online shopping apps have also use this buying behavior to their advantage by promoting sales not just on paydays but round the clock.
Although one can get a good deal out of a sale, the problem with most Filipinos is that we tend to buy on impulse so we end up buying things that we don’t actually need.
The solution to this is to implement a framework to guide us on how money should be spent on a certain item or time frame, or in other words, to practice proper budgeting. It’s not wrong to reward ourselves at times but they key is making sure that the things we buy for ourselves should serve a purpose and give meaning to our lives.
3. Costly price of convenience
In this day and age where everything seems to be going digital, it’s no surprise that people gravitate towards convenience. We have ride-hailing apps to meet our transportation needs especially in the worsening metro traffic. We have food delivery apps to satisfy our gastronomical cravings without having to go out of the house.
While these apps undeniably provide us with comfort and convenience, the amount of money we spend on availing their services might surprise us. If left unchecked, the cost of convenience will definitely eat a significant portion of our budget.
It is best to keep track of the costs when we use these apps and see to it that they are well within our budget. There are a lot of expense tracker apps available in the internet with functionalities that will help us stick to our budget.
For us to battle these bad spending habits, we have to make a conscious effort in curbing them. It is also important that we continuously educate ourselves regarding personal finance. With the wide array of information available on the internet, the task of educating ourselves might seem a little daunting and can get confusing at times. However, that shouldn’t stop us. We can partner with financial consultants or attend webinars/seminars on personal finance and asset management. Once we are financially literate, we can then make sound and informed decisions that will help us achieve our financial goals in life.
To our ever-supportive readers, we are are inviting you to be a globally recognized Registered Financial Consultant. Once you attend and pass the training, you will stand out as qualified Financial Advisor with RFC designation. This enables you to provide professional growth in Financial Planning profession.
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Disclaimer: Just a reminder, dear reader, that the content in this column is my opinion only and should not be construed as investment advice because I am not your financial adviser, neither did I take into consideration your personal objectives, financial situation, needs or circumstances as your fiduciary. Above mentioned mobile applications should be accessed at your own risk. This column is not advertised or endorsed by the developers of the said mobile applications. It is mainly for your entertainment and education only.