Managing finances is one of the challenges of starting a family. It’s not enough to simply get by until the next payday. Young couples need to learn how to manage their finances, find additional cash flow sources, and anticipate future expenses. In a nutshell, families should learn financial planning.
Low Financial Literacy in the Philippines
One of the defining qualities of Filipinos is their tendency to be family-oriented. Family members help each other, especially when it comes to money. Parents pay for their children’s education all the way through college. Children, in turn, support their parents when they grow old. This is an admirable value, but it does have its disadvantages.
For instance, many parents are largely apathetic towards financial planning and growing their retirement because they expect their children to provide for them later in life.
Standard & Poor’s 2015 Financial Literacy report reflects this attitude, too. According to the data, only around 25% of adults in the Philippines are financially literate. This is a culture that young families today need to break — and they can start by investing their money where it can grow and significantly pay off in the future.
Insurance: Savings and Investments in One
Buying insurance for the family is financial planning in practice. It secures long-term savings and investments in one monthly payment. More importantly, insurance offers financial coverage for basic needs like health and education.
Life insurance is a good place to start. According to PLIA or the Philippine Life Insurance Association, Inc., life insurance policies offer savings and investment opportunities, retirement income, and payouts to beneficiaries upon the insured’s death.
Health insurance is another smart option. Although most life insurance plans have health benefits, dedicated health plans may provide wider coverage and better benefits, so policy holders would do well to explore their choices.
Lastly, an educational plan is also a good investment. Even if inflation rates increase twenty years from now, you’ll still be able to secure your child’s college education with its help.
The goal of financial planning is to achieve financial security in the future. It may not leave a lot for material luxuries at present but not having to worry about money in the future is the best luxury in the world.