A pressing concern
According to a study by Standards and Poor on global financial literacy, the Philippines placed 30th out of 144 countries. In the study, only 2 out of 10 Filipinos correctly answered fundamental financial literacy questions in the study.
It is a nationwide concern, as financial literacy is defined as the capacity to understand and apply concepts that allow one to navigate the economic and financial aspects of life. Without this one is more likely to make financial decisions that can negatively impact their life in the long run.
But how does one start his journey towards becoming financially literate?
Starting young and still learning
For Sjoerd Smeets, President and CEO of EastWest Ageas, his journey began when he was a child “It all started when my parents gave me pocket money as a child. It allowed me to spend this on candy or save it to buy a nice toy after a couple of weeks.”
Starting at such an early age has helped Sjoerd to practice and enjoy the first small step in toward being more financially literate: saving.
The practice of putting money away was also the first move toward understanding the ins and outs of financial management for Joub Miradora, EastWest Ageas' Chief Customer Officer. “When I was young, I was only taught to save in a piggy bank," he explains. But it wasn't until he was in his twenties that Joub got started.
"At the age of 25, I met some experts and advisors in the financial services industry who taught me how to get started on the path to financial freedom and the appropriate financial products and solutions."
Setting goals
Anyone, regardless of age, can embark on their journey. Learning never truly stops, after all. And to start it, Sjoerd shares the one question you should ask yourself to light your own path.
“Think about that one thing that you really want to own or accomplish. Then consider how long it will take you to achieve that status. If you’re serious about it, spend some time planning how you’ll get there with the resources you have.”
Joub echoes this by sharing his personal goal. “At 30, I also dreamt of retiring at 55, and I pushed myself to ask experts and advisors how I could make it happen.”
Checking your lifestyle
When you have set your goal, the next thing you should do is be aware of your lifestyle. Joub recalls stories of people who never manage to break free from the cycle of debt. “I listened to stories of people from rags to riches, rags to riches, then back to rags, and got curious about the recurring behavior that they displayed.”
And the toughest issue was always figuring out how they spent their money. The most common mistakes they made were spending all of their income and leaving nothing behind, overusing credit cards, making one-day millionaire purchases, and not having adequate health coverage.
The best way to combat this, Sjoerd advises, is to always be aware of how you spend your money. “Know your weekly or monthly expenses and income. You can only begin saving and preparing for a more financially secure future if you really understand what you do with your money.”
Seek out help
“Unlike my time when financial literacy was not openly discussed, content and advice are just everywhere,” Joub said.
“Almost everything is available online. There are books on how to get started on the path to financial security, how to move up in life, prepare ahead, and even leave a legacy. Listen, while also discerning. See what works for you. After all, personal finance is a matter of personal choice.”
“Step by step, you learn about this. And financial advisors can help you in determining your need based on your current expenditure, income, and future protection expectations,” Sjoerd said, “When you are financially literate, you can better build your future dreams. It helps to provide your partner and children gain independence and build their lives.”
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