Strategies to financial stability

CEBU, Philippines - More and more Filipinos have learned to embrace the importance of financial literacy and that it should be available to all so to make financial progress attainable.

For so long, several people have not been so mindful of financial practices because of some misconceptions and prior beliefs that it was only for people who knew the jargon.

However, an official of a life insurance company believes it can be observed lately that people are gradually realizing financial advices have to be applied for life.

"I think what really should be the objective is to promote financial literacy," says Rolan H. Enriquez, PhilAm Life's vice president and director of agencies for Visayas and Mindanao.

"There should be awareness on financial preparation."

A survey by MasterCard Index of Financial Literacy stated that in 2013 Philippines ranked 8th among 16 Asia-Pacific countries on basic money management, financial planning and investing.

"We are financial beings and we have to be very careful in making financial decisions… and even in the household you should be able to maintain financial wellness," advises Enriquez who is director to the company's financial advisors working in various agencies in the VisMin area.

Enriquez says convergence, being the trend now in the financial sector, has provided people a lot of opportunities to grow their money and become financially ready.

Enriquez shared some financial strategies leading to a prosperous financial life:

1. Know your priorities. Before people should decide to invest or use their money in any way they want, they should first have to know their financial priorities such as educational plan or taking care of the family. "Go to the basic first--budgeting. You need first to balance your budget and it should be aligned to your objectives," Enriquez says, stressing there are unnecessary expenses people can actually avoid. Family must be considered in the goal-setting process.Extra money gained from work should be converted into assets that give financial benefits--not liabilities. "Anything that gives you income are your assets while anything that takes income are your liabilities."

2. Where to invest. People have a lot of choices as to where they can possibly grow their money but investing should be done when basic requirements are already met, Enriquez said.

"Focus first on your savings before investment," he adds. "Some people are so lured by investment because of the quick returns."People are advised to go for the investment instrument that helps them achieve their goal. They can make money in stocks, savings, bonds and mutual funds.

"The rule of thumb is the higher the risk, the higher the return," he says on what instrument that gives higher returns. "So you should not believe on someone saying 'you will earn higher without some risk' because there's always a risk."

3. Seeking professional advice. Hiring a professional to help handle financial planning, insurance coverage or stock trading can minimize the possibility of failure, he said. Financial advisers can better tell the condition in the industry and the best portfolio to have as these people are well trained for this purpose.

4. Recovering from debt. Don't allow to be trapped in debt and other mortgage payments and try to get out from there, Enriquez advises. Recovery starts in knowing one's debt situation.Some people go into debt because of poorly made financial decisions, and in this case, they should have to deal with the reality.

5. Buy only what's important.Sharing words of Suze Orman, an internationally known financial advisor and motivational speaker, Enriquez said :First, buy only the things needed with money that is already earned. Second, try asking these to yourself: "Do I really need this? Do I have the money now?", "Will this thing benefit me and my loved ones?"

Envy on other person's material acquisition may push an individual to buy luxury by credit, which Enriquez says, must never be done.

"Remember that financial freedom can't be achieved by earnings," he says. He cites: "Go back to the basic financial four 'K' tests: 'Kailangan ko ba?', 'Kaya ko ba?', 'Kabutihan ba?', 'Ikagaganda ba ng pamumuhay ng pamilya ko?'"

6. Respect the 'piso'. Saving coins, the director advises, can be turned into a habit saying parents' engagement to their children has to be enjoyable. Correct handling of money should start at a young age.

8. Take part of the growth. A financially literate population can further sustain economic growth as more people are investing and using their money wisely.

"May tinatawag kasi tayong virtuous cycle when you have extra income that should be converted into productive use," he said. (FREEMAN)