Financial Literacy Seminar 2016 Module 1: Personal Finance, the basic foundation on handling your hard earned money.

Module 1Written by: Ezekiel Callado

The first module of the Financial Literacy Seminar 2016 was held last Jan 30, 2016 at the Klimex Office in Makati. It was about Personal Finance specifically Financial Stewardship, The Power of Positive Mindset, The Art of Budgeting and Debt Management, Emergency Fund and Protection, and Preparing for Future Needs.

The first topic was about Financial Stewardship: Spiritual Side of Money. Did you ever wonder how many times the word “money” was written in the Bible? About 2,000 times. It is the most mentioned topic in the Bible. God wants us to be the good stewards of money by being mindful of our spending. We must live within our means; Income > Spending. We must also have to learn how to properly distinguish our needs from our wants. We are given gifts for good stewardship. Time, talent, and treasure. We all have 24 hours a day, but how much time do we spend with God? How can we use our talent for God’s glory? God has given us everything we need, how do we give back to the Lord?

                Keys to responsible spending were also tackled. We must have a proper mindset: conform to God’s will, not the world’s. We must have a stewardship perspective. We must have contentment. We should avoid comparing our lifestyle with others. Avoid coveting. And, heavenly investing. Some of the practical steps are to set your goals, prayerfully plan ahead, execute and monitor, evaluate, and make necessary adjustments.

                Before proceeding, Bro Waltz asked everyone to stand up. He instructed us to close our eyes, imagine that we were standing on a stage, and our family, our friends, and our loved ones in front of us. We were then instructed to shout, “I am a multi-millionaire”.

                The next topic was about The Power of Positive Mindset which started with a quote from Mahatma Gandhi, “your beliefs become your thoughts, your thoughts become your words, your words become your actions, your actions become your habits, your habits become your values, your values become your destiny” and Robert Kiyosaki, “The single most powerful asset we have is our mind. If trained well, it can create enormous wealth.” Good mindset + good action = good result. Bad mindset + bad action = bad result.

                The money mindset of a normal person was also distinguished from a multi-millionaire mind. Some are: the former is concerned with protecting his ego, has a consumer mentality, resists change, and talks about people or things while the latter asks questions and is always willing to learn, has an entrepreneurial mentality, and embraces change.

                How to develop a positive mindset:

  1. Know your personal “WHY”
  2. Focus on your blessings
  3. Confess the good – Affirmation
  4. Have a positive friend / mentor
  5. Feel the love
  6. Keep dreaming
  7. Trust in God and obey

To end Sis Roc’s presentation, she showed us a powerful video.

The next topic is The Art of Budgeting and Debt Management. Budgeting is prioritization of goals, allocation of resources, and monitoring of cash flows. Goals are dreams with a target date. Goals should be SMART. Goals should be written and visualized. Allocating our resources should start from the basic and essential needs, then debt payments, then future needs, then leisure/entertainment, and last non-essentials. To create an effective budget (1) we must examine our current expenses; reduce or eliminate non-essentials to know where our money goes. Record and summarize our expenses for 1 to 2 months. Then, decide which of those expenses can be reduced or be eliminated. (2) Use a budget that fits our needs. (3) Do not memorize, write it down. (4) First item in your budget should be our savings, target 10-20%. (5) Monthly payment for debt should not exceed 20% of our income. (6) Set aside a monthly amount for periodic or irregular payment. (7) Adjust to changes in our financial situation. Sis Win showed us some budget tools, but whatever works for you is fine! Cash flow is the movement of money whether inflow or outflow. Monitoring our cash flow puts us in control of our finances, helps us prevent impulsive buying or spending, and enables us to keep track of how we spend our money. Remember, DISCIPLINE IS KEY. After having a budget, we must also know how to manage our debt. More and more people are getting into debt because of reckless spending, consumerism / materialism, and keeping up with the Joneses. “Keeping up with the Joneses is an idiom in many parts of the English-speaking world referring to the comparison to one’s neighbor as a benchmark for social class or the accumulation of material goods. – Wiki” People turn to salary loans / CA, mortgage, and the Darth Vader of debts, credit card debt. To manage personal debt we must have awareness, acknowledgement, admittance, acceptance, action, adjustment, and avoidance.

                After having a budget, and managing your debt, we must establish an emergency fund and protection. An account that is used to set aside funds or the standby money that can be used in an emergency, such as the loss of a job, an illness or a major expense. Ideally, we must have 3-6months worth of household expenses. Figure out how much we spend each month. If we already have an available fund, set it aside now! No touching, unless it is emergency! SALE is not an emergency! If we still need to build it, here are some ways: cut on some unnecessary spending, include the emergency fund in the budget per month, or get support from friends by doing a 52 weeks money challenge. Then, decide where to put the fund. It can be on a savings account, time deposit, mutual fund, or in a lockbox / vault at home. Having a life insurance is a protection against the loss of income that would result if the insured passed away. Or we can put it in a healthcare plan which provides or pays the cost of medical care. Creating a FINANCIAL SAFETY NET is like saving for a rainy day.

                The last topic was about Preparing for Future Needs. We must prepare for our children’s education and our retirement. For every 100 Filipino children, 23 enter college, and 14 graduate from college. Sis Jean showed us a hypothetical comparison of the tuition fees of different schools. If our child is 10 years old now, and the current tuition fee for engineering is Php 220,000 per annum, and the age of our child to enter college is 19 years old, then we still have 9 years to save for education. With an annual 10% increase in tuition fee, in 2026, it would be Php 518,746. In 2027, Php 570,620. In 2028, Php 627, 682. In 2029, Php 690, 450. In 2030, Php 759, 495. So, in 5 years in college, the total tuition cost is Php 3,166,993!

                Next is retirement planning. 75% of seniors are living poorly. 15% are just getting by, 9% are living comfortably, 1% is living in luxury. We must avoid retirement mistakes like not having a plan, delay planning, depending on government pension, and depending on our children. Just like our goals that should be written and visualized, our retirement should also be written and visualized!

                The bonus topic was the market outlook from Bro Badong! Before that, he shared some reflections about living. We must be optimistic with our life and good things will happen. Whatever we say, it is our wishes. So, if we say or talk about negative things, we will also attract negativity. We must have a positive outlook in life, and we will attract positivity.

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