Financial literacy my edit 012710
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FINANCIALFINANCIALLITERACYLITERACY
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Financial Literacy is:Financial Literacy is:
Understanding and knowing Understanding and knowing how you can build your how you can build your personal wealth based on your personal wealth based on your present income.present income.
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THE REASONSTHE REASONS
Based on studies, OFWs work abroad due to Based on studies, OFWs work abroad due to some of the following reasons :some of the following reasons :
1. Education of their 1. Education of their ChildrenChildren
2. To build a House2. To build a House
3. To Help the Family3. To Help the Family
4. To earn a BIGGER Income4. To earn a BIGGER Income
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OFWs’ REASONSOFWs’ REASONS
7. To Travel and See 7. To Travel and See Other Countries.Other Countries.
5. To Save for the Future5. To Save for the Future
6. Self Development6. Self Development
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INCOMEINCOME
Your BankYour BankAccountAccount
Support forSupport forParents, Parents, RelativesRelatives
Your Children’sYour Children’sEducationEducation
HouseholdHouseholdExpensesExpenses
InsuranceInsurancePremiumsPremiums
Where does your Money Where does your Money go?go?
FACING THE REALITIESFACING THE REALITIES
OthersOthers
Pay off debt Pay off debt for the tripfor the trip
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3 Typical Budget Scenarios3 Typical Budget Scenarios
Total IncomeTotal Income
Less: Total ExpensesLess: Total Expenses
BalanceBalance
II
$ 3,400.00$ 3,400.00
4,000.004,000.00
----------------------------
($600.00)($600.00)
IIII
$3,400.00$3,400.00
3,400.003,400.00
----------------------------
--
IIIIII
$3,400.00$3,400.00
3,000.003,000.00
----------------------------
$400.00$400.00
DeficitDeficit Surplus / SavingsSurplus / SavingsEvenEven
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USUAL EXPENSES / CASH OUTLAYS: Family Expenses (Remittance)
Personal Needs (Clothes, Hygiene & Beauty Products / services, etc.)
Food
Traveling
Phonecards / cellphone
Savings
$1,500
$500
$500
$500
$150
$250
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USUAL EXPENSES / CASH OUTLAYS: Family Expenses (Remittance)
Personal Needs (Clothes, Hygiene & Beauty Products / services, etc.)
Food
Traveling
Phonecards / cellphone
Savings
$1,150
$500
$500
$150
$150
$150
Loan$800
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NeedsNeeds Things that you must Things that you must
have in order to live and have in order to live and advance in your workadvance in your work
Basic consumption like Basic consumption like food, clothing and shelterfood, clothing and shelter
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WantsWants Things that you Things that you
would like to have would like to have but can live withoutbut can live without
Non-basic items like Non-basic items like jewelry, cigarettes, jewelry, cigarettes, alcoholic beveragesalcoholic beverages
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Cut-down expenses relating to the things you WANTCut-down expenses relating to the things you WANT Retain expenses relating to the things you NEEDRetain expenses relating to the things you NEED
Pirla Soap Php 9.00
Pirla Soap Php 9.00
Sipgard w/ germ protection
Php 19.00
Sipgard w/ germ protection
Php 19.00
DabDab w/ moisturizer w/ moisturizer
Php 38.00Php 38.00
DabDab w/ moisturizer w/ moisturizer
Php 38.00Php 38.00 Glutathione-L Glutathione-L
Php 43.00Php 43.00
Glutathione-L Glutathione-L Php 43.00Php 43.00
NEED vs. WANTNEED vs. WANT
NEEDS vs. WANTSNEEDS vs. WANTS
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Know the differenceKnow the difference
YourYourNEEDSNEEDS
YourYourWANTSWANTS
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SAVINGSSAVINGS
Refers to the part of your Refers to the part of your disposable income (take-home disposable income (take-home pay) that is not spent on pay) that is not spent on consumptionconsumption
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Be Disciplined!
Income – Expenses = SAVINGS x
Income – SAVINGS = Expenses
PUT SAVINGS FIRST.
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Redefining SavingsRedefining Savings
It must be defined It must be defined as an as an EXPENSEEXPENSE. .
It is an expense that It is an expense that BUYSBUYS your yourFUTUREFUTURE..
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FINANCIAL STAGESFINANCIAL STAGES
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Where does yourWhere does yourMoney come from?Money come from?
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CASHFLOW QUADRANTCASHFLOW QUADRANT(Four ways that money may come your way)(Four ways that money may come your way)
Work for yourselfWork for yourself
Work for somebody elseWork for somebody else Go into businessGo into business
Make your money Make your money work for youwork for you
RAT RACERAT RACE
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CASHFLOW QUADRANTCASHFLOW QUADRANT(Four ways that money may come your way)(Four ways that money may come your way)
Work for yourselfWork for yourself
Work for somebody elseWork for somebody else Go into businessGo into business
Make your money Make your money work for youwork for you
FAST TRACKFAST TRACK
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The CASHFLOW GAMEThe CASHFLOW GAME
INCOME
EXPENSES
ASSETS LIABILITIES
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CASHFLOW 1CASHFLOW 1
INCOME
EXPENSES
ASSETS LIABILITIES
Job orJob orProfessionProfession
- Larry Gamboa- Larry GamboaThink Rich, Pinoy!Think Rich, Pinoy!
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CASHFLOW 2CASHFLOW 2
INCOME
EXPENSES
ASSETS LIABILITIES
Job orJob orProfessionProfession
- Larry Gamboa- Larry GamboaThink Rich, Pinoy!Think Rich, Pinoy!
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CASHFLOW of the RICHCASHFLOW of the RICH
INCOME
EXPENSES
ASSETS LIABILITIES
Job orJob orProfessionProfession
- Larry Gamboa- Larry GamboaThink Rich, Pinoy!Think Rich, Pinoy!
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Negative MindsetsNegative Mindsets
““I do not have enough money”I do not have enough money” ““I do not have good enough I do not have good enough
ideas”ideas” Distrust of people – “mandaraya Distrust of people – “mandaraya
silang lahat”silang lahat” Fear of failureFear of failure
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In fact, we can be In fact, we can be RICH!!!RICH!!!
We can attain We can attain FINANCIAL FREEDOM!FINANCIAL FREEDOM!
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Man Man At WorkAt Work
11Man & Money
At Work
22Money
At Work
33FINANCIAL STAGESFINANCIAL STAGES
Where do you wantWhere do you wantto be in the future?to be in the future?
Where are you now?Where are you now?
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PlanPlan11
22SaveSave
InvestInvest33
Three STEPS to achieving Three STEPS to achieving FINANCIAL FREEDOM:FINANCIAL FREEDOM:
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PLANPLAN
The FIRST STEP to The FIRST STEP to achieving FINANCIAL achieving FINANCIAL
FREEDOM:FREEDOM:
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Steps in Financial PlanningSteps in Financial Planning
a. Set family goals together;a. Set family goals together;b. Set a time frame for achieving family b. Set a time frame for achieving family
goals;goals;c. Discuss and determine how each c. Discuss and determine how each
member will contribute to achieving member will contribute to achieving family goals;family goals;
d. Remind everyone of their commitment d. Remind everyone of their commitment from time to time; and from time to time; and
e. Monitor whether the family is achieving e. Monitor whether the family is achieving its goal or not.its goal or not.
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Family goals are usually centered on the Family goals are usually centered on the ff:ff:
a. Educationa. Educationb. Housingb. Housingc. Healthc. Healthd. Retirementd. Retiremente. Protection/preparedness against e. Protection/preparedness against
unforeseen eventsunforeseen eventsf. f. Savings Savings && Investment Investment
Setting-up Family GoalsSetting-up Family Goals
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Setting a Time Frame Setting a Time Frame for Each Goalfor Each Goal
Start by answering the following questionsStart by answering the following questions:: Education - When will all the children/siblings finish high Education - When will all the children/siblings finish high
school or college?school or college? Housing – When can you buy your own home or at least Housing – When can you buy your own home or at least
make the down payment for a new home?make the down payment for a new home? Retirement – At what age do you plan to retire?Retirement – At what age do you plan to retire? Health and Protection – Do all the children have the Health and Protection – Do all the children have the
required vaccinations? Do all adults have family health required vaccinations? Do all adults have family health plans?plans?
SAVINGS & INVESTMENT – How much & until when SAVINGS & INVESTMENT – How much & until when should you save? Where and how much to invest?should you save? Where and how much to invest?
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LIFE LIFE GOALSGOALSLIFE LIFE
GOALSGOALS
TIMELINETIMELINETIMELINETIMELINE
2 years 10 years
Retirement
Fund (P 1 Mn.)
20 yearsIMMEDIATELY
Graduation Fund for Child 1(P 50 K)
Funds for Business
Undertaking (P 100 K)
Build Dream House
(P 5 Mn.)
• Create a timeline on when you want it to Create a timeline on when you want it to happenhappen• Specify amount neededSpecify amount needed
YOUR FINANCIAL PLANYOUR FINANCIAL PLAN
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SAVE!!!SAVE!!!
The SECOND STEP to achieving The SECOND STEP to achieving FINANCIAL FREEDOM:FINANCIAL FREEDOM:
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SAVINGSSAVINGS
SavingSaving is a is a conscious and conscious and deliberate way of deliberate way of setting aside a portion setting aside a portion of the personal income.of the personal income.
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ProcrastinationProcrastination - delaying savings - delaying savings or putting savings off for another or putting savings off for another time;time;
Poor Spending HabitsPoor Spending Habits – – includes spending on includes spending on unnecessary items; unnecessary items; impulse buying; impulse buying; hedonistic lifestylehedonistic lifestyle
OBSTACLES TO SAVINGSOBSTACLES TO SAVINGS
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OBSTACLES TO SAVINGSOBSTACLES TO SAVINGS
Lack of Financial LiteracyLack of Financial Literacy – Spending on liabilities or – Spending on liabilities or items that decrease in value items that decrease in value over time; not knowing how over time; not knowing how your money will grow or work your money will grow or work for youfor you
Culture of Dependency Culture of Dependency -- Being overly dependent on Being overly dependent on othersothers
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MAKE YOUR MAKE YOUR MONEY GROWMONEY GROWInvest your savings in Invest your savings in money-making assets. money-making assets. MAKE YOUR MONEY MAKE YOUR MONEY WORK FOR YOU.WORK FOR YOU.
INVESTINVEST
The THIRD STEP to The THIRD STEP to achieving FINANCIAL achieving FINANCIAL
FREEDOM:FREEDOM:
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SAVE TO INVESTSAVE TO INVEST
KEEPING MOREKEEPING MOREof the money you of the money you earnearn
MAKING MOREMAKING MOREwith the money you with the money you keepkeep
$MART MONEY MECHANIC$
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CASHFLOW of the RICHCASHFLOW of the RICH
INCOME
EXPENSES
ASSETS LIABILITIES
Job orJob orProfessionProfession
- Larry Gamboa- Larry GamboaThink Rich, Pinoy!Think Rich, Pinoy!
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INVESTMENTSINVESTMENTS
InvestmentInvestment is is the the commitment of fundscommitment of funds
made in expectation of made in expectation of some some positive rate of positive rate of
returnreturn. .
If the investment is If the investment is properly undertaken, the properly undertaken, the
return will be return will be commensurate with the commensurate with the
risk it assumes.risk it assumes.
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WISE INVESTMENTWISE INVESTMENT Think of an affordable project:Think of an affordable project:
Start small but think big
Person to handle (Meron / kaya ba?)
Viability
Preparation – Acquisition / Enhancement of skills
Encourage Family Members in the Philippines to learn the same skills
Eventual Reintegration:Eventual Reintegration:
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INVESTING IN YOUR OWN INVESTING IN YOUR OWN BUSINESSBUSINESS Remember that not everyone has what it takes to run a Remember that not everyone has what it takes to run a
successful business;successful business; If you think that you have what it takes to become a If you think that you have what it takes to become a
successful business person, then its time to plan your successful business person, then its time to plan your business;business;
Think about what business you can engage in;Think about what business you can engage in; Look around you and identify business opportunities and Look around you and identify business opportunities and
evaluate each options;evaluate each options; Do a situational analysis; identify the strengths, Do a situational analysis; identify the strengths,
weaknesses, opportunities and threats to your proposed weaknesses, opportunities and threats to your proposed business.business.
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BORROWING / LOAN Never treat as source of income
Only when necessary
Dulot ay ka-Loan-kutan kung hindi kailangan- Bulabog ng
collector- Termination YOU’RE
FIRED!
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