Let us make the year 2018 a better year than 2017, in the sense that we are able to manage our finances. Financial literacy is a must in life, I wonder why all persons are not being taught Personal Finance 101 in our elementary, Personal Finance 201 in high school, and Personal Finance 301 in college. And all those who want to get married should pass Family Finance 101 before being granted a marriage license. My study indicates that more than half of broken families and shattered marriages were caused by inability to manage family and personal finances well. Finance, in its most fundamental form, is nothing but planning, strategizing and managing one's incomes, expenses, savings, and investments.
The problem with our ordinary people nowadays is that we tend to spend all our income and even beyond our incomes. Thus, we really create our own financial troubles. The Taiwanese have a simple formula (I lived in Taiwan as a diplomat for three years). The Taiwanese spend only at the most, 50 percent of their net income or take home pay. They make sure to save 25 percent and invest the remaining 25 percent. The savings and the investments are also sources of income but they never touch the financial returns from such interest income and investment income. Therefore, you do not need a degree in finance to figure out that Taiwanese grow their net worth every year.
Let us look at the Chinese people in the Philippines. When they earn P20,000 a month, they always save P5,000 and invest P5,000. At the very most, they do only spend P10,000. They really try very hard to discipline themselves and their family members to stick to budget or else they shall suffer later by self-punishment. The problem with most people who are financially ignoramuses is that they always spend more than they earn. They buy luxuries that they really do not need, gadgets that will create more pressures to spend more and fancy clothes, accessories, and jewelries that shall remain non-performing assets in their closets.
Wise people have double, triple, or multiple incomes. They have salaried jobs and small business by the side, like a small shop, carenderia, spa, laundry, barber or dress shop. They engage in buy and sell of goods by internet. They cook simple foods and supply their officemates and friends. The wise always buy simple apartments to be rented out. The fools buy ostentatious mansions on installments only to be repossessed by the banks when they fail to pay the mortgages. The wise buy vehicles for Uber or Grab and earn income. The fools buy luxury cars for showing off and bragging. At the end of the day, the fools come kneeling before the wise to borrow money.
Let us make 2018 the year when we shall gain financial literacy, financial wisdom and ultimately, financial freedom. Let us use our common sense and a lot of self-discipline.