With the rising cost of living in the Philippines as well as the increasing accessibility of financial products such as credit cards, loans, and digital banking, financial literacy has become more important to Filipinos than ever. It’s what equips a Filipino consumer with the knowledge to manage their finances wisely, avoid excessive debt, and make smarter decisions about saving and investing—all of which are vital components of a strong financial foundation.
Even though digital finance—in the form of online banking and e-wallet account features from e-wallets like Maya—has made managing money more convenient, it’s still possible to misuse these tools, overspend, or fall into debt without proper financial knowledge. Thus, if you’re the type who doesn’t usually care about budgeting or tracking your spending habits, now’s the time to start putting in more effort into improving your baseline financial literacy.
Here are some simple steps you can take today to become more responsible and mindful of how you manage your finances:
1) Make Tracking Income and Expenses a Habit
Understanding where your money is going is the first step towards improving your financial habits. You might think you know how much you spend, but small, everyday purchases such as food deliveries, online shopping, or frequent ridesharing can all add up before you know it. It’s essential to track your income and expenses in detail to get a clearer picture of your spending habits.
To keep track of your spending, you can write everything down in a notebook, use a budgeting app, or even check your transaction history in your e-wallet account or online banking app. If you know exactly how much you earn and spend, you can identify areas where you need to cut back and start saving more.
2) Create a Budget Plan That Works for You
A working budget remains one of your best friends when it comes to properly managing your money and ensuring that you have enough for your essential needs while still setting aside savings and enjoying occasional wants. A good rule of thumb to follow is the 50/30/20 rule, which means you allot 50% of your income to needs (rent, food, utilities), 30% to wants (shopping, entertainment, hobbies), and 20% to savings and investments.
That being said, budget plans can vary greatly depending on your financial situation or personal goals. Don’t be afraid to modify that rule or simply create your own. For instance, if you want to build up your savings faster, then you may consider cutting back on wants and allocating a larger percentage of your income to savings instead.
3) Take Initiative to Learn About Different Financial Products
A lot of Filipinos keep their money in a regular savings account, but there are better ways to grow your money. Take the time to learn about high-interest savings accounts, mutual funds, stocks, and other investment products. You don’t have to invest all your money right away—financial literacy can begin by simply researching and understanding how these financial products work.
For instance, instead of letting your money sit in a low-interest savings account, you can explore time deposits or unit investment trust funds (UITFs), which offer higher returns. Your knowledge of different financial products will go a long way towards making the most sensible decisions with your money.
4) Set Clear Financial Goals
Saving money is easier when you have a clear goal in mind. Whether you want to buy a house, start a business, travel to a dream destination, or retire comfortably, setting a goal will help you stay disciplined with your spending and saving habits.
It would be even better if you set a specific timeframe for when you want to achieve these goals. Say you want to buy a house in five years. Instead of just hoping you’ll have enough money by then, you can then calculate how much you need to save per month within that timeframe for a house down payment and adjust your spending accordingly. This way, it won’t be hard to monitor whether you’re on track with your goals or not.
5) Avoid Unnecessary Debt
Having access to loans and credit cards can be extremely helpful, especially when urgent or emergency expenses arise. However, if not managed properly, these sources of debt can also lead to serious financial problems.
Part of financial literacy is making sure that you fully understand the interest rates, penalties, and payment terms that come with your credit. Always strive to pay your balance and settle your loan repayments on time and in full to prevent interest charges from becoming too hard to pay off.
Being mindful of your debt not only helps you avoid financial stress but also keeps your credit record in good shape–something you’ll want if you hope to be eligible for bigger financial privileges, like premium credit cards or home loan approvals, in the long run.
6) Work Towards Building an Emergency Fund
Life can be unpredictable—you never know when you’ll have to face medical emergencies, urgent home repairs, or even the sudden loss of your job. Such situations can be doubly stressful if you’re not financially prepared for them.
That’s why having an emergency fund is so important, as it provides you with a financial cushion even when the unexpected comes. Ideally, you should save at least three to six months’ worth of expenses in a separate savings account that you don’t touch unless absolutely necessary.
All that being said, remember that improving your financial literacy doesn’t mean you have to make drastic changes overnight. It’s all about taking small, yet consistent steps that will help you manage your money better and build a more secure future for yourself.
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