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Money pitfalls of Filipinos

14 April 2016

In my years of teaching and learning, what has emerged as the top 3 financial challenges/pitfalls faced by a Filipino when it comes to money matters?
1) Over spending. There is nothing wrong with spending especially for needs or things that are necessary to keep us alive. Unfortunately, it's the "wants" or things that we don't really need that attract us when we go shopping. Ordinary needs like food are so commonplace and corny to buy that they often become second priority. Special expensive food can also be categorized as "wants." There is excitement in "wants" and unfortunately that excitement is what gets us into trouble. I cannot help but feel this started with Adam and Eve in the Garden of Eden. They had everything they needed but they were attracted to the one thing they should not have. And we all know what happened after. The lesson is not to let any person or anything tempt you to spend for things you don't really need!
 2) Over borrowing. Again, there is nothing wrong with borrowing. The trouble is that all loans have to be repaid. We need to be sure we have the means to pay back the loans. The general rule is that we can borrow for as long as we use the loan to generate more income or reduce a regular expense to provide funds to pay back the loan. For example, when you borrow for your housing loan, you are replacing your rental expense with the amortization of your loan.
Even "high interest" may not really be high. For example, if you cannot get any loan from anyone because you do not have any collateral to offer, you may have to accept a higher than normal interest rate. However, you have to make sure that you can pay the amortization. Also, whatever it is you are using the loan money for, must bring you additional income or reduce your expense to cover the higher interest rate
 3) No "wealth or money" planning. Thus, no savings. When we are young, we cannot imagine we will grow old. Retirement is a long way off. Emergencies will not happen to us. We are young and strong to cope with "rainy days." But it only takes one  wrong move or an unfortunate act of nature to make people who think this way to  panic. At that point, it could be too late to reach your goals when it could have been so easy had you started to plan and save early. The earlier you start planning for your "old age", the easier it is to move in accumulating enough. It is a matter of mindset  and some maturity at an early age. It would be good for parents to understand what they are going through as their children mature and teach them the right values.
Wishing all of us a Merry Christmas and an Amazing and Healthy 2016!

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