Financial education to battle poverty

The elusive dream of Filipinos to attain financial freedom is almost close to impossible. Reports show that in 2022, only half of the Filipino adult population have savings, an improvement from previous years when only two out of ten Filipinos were found to have a savings account.

This may be due to some aspects of Filipino culture. While our culture boasts of many good traditions, values, and practices, some of them are double-edged swords. While the enduring tradition of “bayanihan” especially among members of the family is good, it can sometimes result in complacency, with some family members refusing to step out of their comfort zone and depending mainly on family support. To attain financial freedom, it is important to teach the young to be self-reliant and make their own decisions based on their own will and principles.

Relying on bayanihan is one trait I‘ve observed in the construction firms where I had worked, with some employees borrowing money from co-workers to make ends meet. While we have the moral obligation to help others, especially if we have the means to do so, borrowing money can become habitual. Wouldn’t it be more helpful to share with these constant borrowers some tips on how to handle finances, or point them to possible additional sources of income?

This demonstrates the relevance of that old adage “Give a man a fish and you feed him for a day. Teach a man how to fish and you feed him for a lifetime.”

Again, this is where comprehensive financial education comes in. We have to keep in mind that the spirit of bayanihan can be truly realized when we use financial education as a tool to help others become financially independent.

Role of parents

Parents have a crucial role in inculcating the importance of tactical financial planning that may help the young generation in understanding their relationship with money. The concept of prioritizing needs over wants must be given emphasis when teaching the value of money and how to spend it.

I remember a good friend who told me that before spending money, you have to ask yourself two questions. First, is the purchase really important? Second, if it is really important, is the purchase urgent?

Further, Morgan Housel, the author of Psychology of Money, stressed that no one is crazy when it comes to money. Our behavior towards it largely depends on our past financial experiences. However, knowing how to effectively deal with money is a skill that must be learned and practiced. Parents and guardians play a vital role in developing basic financial strategies among the youth. This involves the values that parents and older members of the family pass on to their children. These, in turn, will help determine the influence that money would have on their lives.

DepEd training

In 2021, the Department of Education launched a program known as Financial Education Policy to increase economic and financial literacy consciousness in basic education. DepEd, through its key officials, is doing a great job of conducting training through financial literacy seminars and symposium every year. Teachers too are crafting lessons and performance tasks which showcase solutions to financial problems.

However, this may not be enough. Parents must be included in the training, to ensure alignment in the financial values being taught in school and at home. This must be done to avoid conflicting ideas that may lead to confusion among learners.

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Finally, the willingness to learn and improve one’s mindset on the role of money in one’s life is important. Not so long ago, the YOLO or “you only live once” mentality was adapted by many Filipino youth. This led to immediate gratification without thought about the future. Financial experts however caution against that and suggest delayed gratification to focus on more immediate needs, such as paying one’s debts, building up an emergency fund to help weather any financial crisis, and increasing one’s cashflow through side hustles. A portion of the money saved can also be allocated to investments in businesses that are in line with one’s job or interest.

These solutions are not easy but are not impossible. In fact, they are practical and doable, and worth trying to uplift one’s financial situation. At the end of the day, it is our financial choices and actions that shape our mindset and eventually determine the kind of life that we’d eventually have.

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Bennegreg Pamplona Siman is the president of STERN ASIA Corp.