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Bank or Broke?

Money is something that makes the world go around. It is one of the most essential material objects one can get their hands on. It can determine whether or not you can put food on the table or if you can receive education. It helps you increase the overall quality of your life. So, how do you manage your money? Do you spend it immediately, or do you save up? If you save up, how do you do it? Do you keep it in a wallet, do you let your parents keep it, or do you have your own bank account, or investments? Do you have a plan with it in case of an emergency? This is where financial literacy comes in.

What is financial literacy?

Financial literacy is an important skill to effectively budget, invest and manage finances. Financially literate individuals are shown to be less susceptible to financial fraud. A good grasp and understanding of the principles of financial literacy also positively impacts a person. Being financially literate helps people save, prepare for retirement, pays off debts, or manage a business.

Why is financial education important?

Financial education is important because it helps increase and improve the overall quality of one’s life. Over the years, financial services have become much more common and accessible, such as health insurances, credit cards, various loans, and many others. As our society continues to progress and develop, so does the complexity of these things increase. That is where the need for financial education starts to become clearer. Seeing as how rapid the finance scene has evolved, especially since entering the digital age, one who is uneducated in managing his or her finances may suffer the effects of it, especially in the long-term.

Lack of financial education in the Philippines

According to the Banko Sentral ng Pilipinas, only two percent of Filipino adults are able to answer questions on this topic, and only eighteen percent of the Filipinos have bank accounts. Over the years, the Philippines has not improved the financial capability of its citizens. The COVID-19 pandemic has emphasized the need of financial education among the people as it has greatly affected their financial well-being, with many losing their jobs. A survey from Manulife Investor Sentiment Index shows that a majority of Filipinos still rely on debt to make do, risking their financial security as many are unable to repay their debts. Another study shows that more than four in ten investors are in debt, majority of which are below the age of thirty-five. Apart from investments, the debts are spent largely on their children’s education, living expenses, medical expenses, and miscellaneous expenses. Studies show that an estimated forty-one percent of Filipino investors are in debt. According to the Asia Development Bank, educational attainment is greatly related to poverty rates. Poverty rates continue to rise throughout the years, and many fail to make the correct investments.

Good advice versus bad advice

“Be careful of who you trust, the devil was once an angel”


One of the most helpful things that someone can utilize for their financial future is a financial planner. A financial planner is a type of financial adviser that helps people get their finances and wealth in order as well as help them reach their financial goals. However, it is important that your financial planner is accredited and trustworthy.

It is also important to know that there are different types of financial advisers. Typical financial planners focus on the general aspects of one’s financial life such as how much money to save and the type of insurance needed. Investment advisory firms focus on which investments are the best for a person. While retirement income planners focus on things like retirement date, your age, and life pensions.

It is of vital importance to check whether they are legitimate or not. Look for a certification in their info such as a CFP (certified financial planner) or a PFS (personal finance specialist).

Research on the usual fees that planners insure such as commission (A commission is a service charge that is paid with a certain amount of money from a client or is charged based on percentage).

Look for complaints as well as lawsuits that were filed against the adviser. If the adviser is loaded with complaints against them, it’s probably time to look for another one.

Consider asking the financial adviser these questions when hiring them:

“Why are you in this business?”

“Do you use stocks or mutual funds?”

“What needs do your clients have in common?”

“Why should I hire you?”

“Why should I not hire you?”

“What gets you up in the morning?”

A financial adviser should ask you these questions when they try to service you:

“Why do you need a financial adviser?”

“What are your long-term goals”

“Do you use a budget?”

“A year from now, what will you have accomplished financially?”

A financial adviser who doesn’t ask these questions might not be a good fit. It’s also important to trust your adviser to protect you from your worst enemy-yourself. A good financial adviser can really help with your impulsive tendencies in spending and investing.

Recommended investments for beginners

The schoolteacher asks Billy Bob: If you have twelve sheep and one jumps over the fence, how many do you have left?

Billy Bob answers, “None”

“Well,” says the teacher, “you sure don’t know your subtraction.”

“Maybe not,” Billy Bob replies, “but I darn sure know my sheep.”


-Benjamin Graham (Excerpt taken from the Intelligent Investor)

A lot of people are often daunted by the idea of investing. They say that it’s a waste of time or that it’s just for the rich. However, the times have changed and investing is now becoming more and more accessible for more and more people. Despite this, it is still important to know what type of investments are out there and the different risks they incur. A lack of proper investment knowledge can turn one’s financial dream into an inescapable, financial nightmare.

A good investment for beginners are government securities (A security is a traceable financial instrument that is used to raise funds). Government securities are a good pick for beginners since they are very low risk and offer good liquidity (Liquidity refers to the ease of an asset being easily converted to cash without affecting its value). Here are two security investments that are backed by the government.

  1. Treasury bills - These are short-term debt obligations where these bills are purchased by someone and that someone becomes its holder. The money of the holder goes to the government and the government then uses these funds to finance projects. The government then returns these funds back along with interest that serves as profit for the bill’s holder. These are offered by the Bureau of Treasury and commercial banks.

  2. Money market funds - These are pools of low-risk investments and assets. (An asset is a financial instrument that makes money and generates returns.) Professional fund managers take your money and invest it in these securities. These are usually short-term and have a holding period of 1 year. These are suitable for busy people since they don’t really have to pay attention to it because the fund manager will do most of the work.

Some financial advice for beginners

An important part of financial literacy is self-control. Self-control is a very important lesson that applies to a lot of different parts of our lives, from controlling our emotions to greater extremes like controlling our addictive tendencies. Like overeating, having self-control with your spending habits is no exception. Here are a few ways one can avoid making poor purchases.

The first step is to stop making excuses for your purchases. When it comes to getting things that won’t really benefit you in the long run, restrain yourself. It’s important to realize that whenever one buys a non-essential item, it sets their financial goals back and brings them one step closer to financial ruin. As the saying goes: “If you buy things you don’t need, you will soon have to sell things you need.” It is important to understand whether the item one is buying will help them survive. If it is a necessity, then try to look for a cheaper, yet equally good option.

The second step is to avoid using credit when possible. Many people love using credit cards for purchases because they are convenient and often have big allowances that allow one to purchase a lot without having to haul a lot of money around. The problem with credit cards is that the user often feels as if they can purchase anything they want using it. It’s even worse for shopaholics that have a bad credit score. (A credit score is a score issued by the bank to determine whether a person can be trusted with a loan). These credit cards also have interest (Interest is the cost of borrowing money. A 10,000 peso loan with an interest of 10 percent annum will increase yearly by 10 percent. So that means after a year, the loan will now be worth 11,000).

The third step is to carry just enough money for the day as this dissuades one from buying, since they probably won’t have enough money to buy unnecessary items.

The fourth step is choosing social engagements wisely. It is important that one makes sure that they are not pressured by their peers into spending recklessly. If one intends to spend money with their peers, it’s important to set a budget. It’s also recommended to do recreational activities such as sightseeing rather than doing activities that require money. When eating with friends or others, encourage each other to split the bill or take turns paying on each occasion to ensure fairer spending.


These pieces of advice sound like massive inconveniences, but they can really help you in the long run. Whether one wants to live a simple life or become rich, it’s important to know how to use and manage money properly. Despite the difficulties, life will surely get better. The world is constantly changing and the world of finance is no exception. From the early days of basic bartering to the age of advanced financial technology that allows for over-the-counter transactions that happen in mere seconds, the one who knows how to use money properly is the one that usually prospers even in tumultuous times.



Agcaoili, L. (2020). Pinoys need to improve financial literacy — BSP. Retrieved from


Anspach, D. (2020). How to find the best financial advisor. Retrieved from

Chen, J. (2020). Liquidity. Retrieved from

Dumlao-Abadilla, D. (2016). PH millennials carry more debts than their older peers. Retrieved


Financial literacy in the Philippines remains low. (2018). Retrieved from




Fontinelle, A. (2021). 8 financial tips for young adults. Retrieved from


Grace, M. (2019). Do you need a financial planner? Retrieved from

Hamm, T. (2016). Ten useful strategies for learning financial self-control. Retrieved from

Kenton, W. (2020). Security. Retrieved from

Royal, J. (2020). 8 best low-risk investments in January 2021. Retrieved from

(2009). Poverty in the Philippines: Causes, Constraints and Opportunities. Retrieved from

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