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November 19, 2017

5 Old-Fashioned Money Beliefs (That You Should Toss Out the Window)

Adhering to what the elders say, we believe, is a sign of respect; at the same time, we trust that they have our best interests in mind. After all, our parents and older relatives surely want what’s best for us, right?

Our culture dictates that we follow what our elders say and this is why through the years, certain beliefs and traditions have managed to survive. Adhering to what the elders say, we believe, is a sign of respect; at the same time, we trust that they have our best interests in mind. After all, our parents and older relatives surely want what’s best for us, right?

But while they all have the best intentions, times do change. And while we aim to be respectful and obedient all the time, there are times when we need to decide for ourselves. Old fashioned beliefs may have withstood the test of time, it is with new and innovative thinking that one can pave the way to a successful and a brighter life.

This holds true as well when it comes to money matters: there are certain old-fashioned beliefs that you should start tossing out the window and here are some of them:

1. BELIEF: Success is not possible without a college degree.

Bill Gates. Mark Zuckerberg. Steve Jobs. We’ve all heard the story of how these visonary millionaire businessmen did not even finish college.

Our own country has its own set of such inspiring individuals.

National Bookstore matriarch Socorro Cancio-Ramos her business from scratch at only 18 years old, with only a diploma from Arellano High School and experience as a salesgirl for Goodwill Bookstore to rely on.

Asia Brewery’s Lucio Tan, who owns Tanduay Holdings and flagship carrier Philippine Airlines among others, actually quit his chemical engineering studies to pursue a job in a tobacco factory. (Ironically, the degree-less businessman currently owns the University of the East)

Another success story is Edgar Sia, an architecture student at the University of San Agustin, who dropped out of school and started Mang Inasal.

These successful individuals are examples of Filipino millionaires who did not finish college – either by choice or due to circumstances. But, in the same way that a diploma does not guarantee success, a lack of one also does not necessarily mean you’re sure to become a millionaire. The key is to get a lock-down on your passion, pursue it, and work on it as hard and as often as you can.

2. BELIEF: Having a savings account in the bank is the peak of financial responsibility.

According to the Study of Lifestyles, Attitudes and Relationships – Financial Literacy Advocacy Report (SOLAR FLARe), Filipinos typically allocate 6% of their income to their bank accounts.

This is good, but is this the best? What about investments?

Putting money intended for long term use solely into a bank account decreases its value because of the inflation. According to the latest report of the Department of Trade and Industry, inflation is currently at 3.4%; so if your money is not earning 3.4% and up, that means you’re actually getting poorer rather than richer.

Truly, time deposits and savings accounts serve a purpose of liquidity for the immediate time being. However, for money intended for long term use – say five to 10 years and beyond – consider mutual funds, VUL, or stocks.

3. BELIEF: Knowing where every centavo goes is a sign of being greedy.

Greedy? Try responsible. Not only is responsible money management a sign of being a responsible adult, it is also a solution to your most common problem of facing an empty wallet at the end of the month. Know where each peso goes. Control where your cash will be allocated.

They say that whoever controls your money controls your life. In this case, as soon as you start getting an allowance or earning your own keep, you should think of yourself as your own Chief Financial Officer.

4. BELIEF: Money is the root of all evil; hence, it’s evil to be rich.

Money is a terrible master but a terrific servant. Working for the sake of money not only leaves you drained, it also takes away your fulfillment for non-monetary things.

Money isn't a poison – it doesn't automatically make you greedy, self-absorbed and corrupt. Money exists solely as a tool, a currency to use in exchange for things we want.

The quantity of your money does not define the quality of your character. Your choices do.

5. BELIEF: It is your responsibility to give money to your family members.

Lending a hand is not bad and helping the family has always been a part of the Filipino culture. However, try to discern whether you’re actually helping them, or just encouraging them to be dependent. When is a family member being needy and when is he being negligent? To be able to handle situations like this properly, remember to differentiate:

Needy: A cousin with a heart problem who still works part-time because she doesn't want to be overly dependent on anybody else.

Negligent: A relative who’s perfectly healthy but doesn't want to find a job because every job he wants is already taken.

Needy: A diabetic aunt who still sells make-up products to her friends because she wants to have a source of income.

Negligent: A 40-year old uncle with one wife and three kids who has no job so he visits to ask for milk money. For someone who’s supposedly penniless, it’s odd that he can afford an iPhone, which he even posted about on his his Facebook account.

We’ve heard it time and again: teach a man to fish... you know how the rest of it goes.

Yes, our parents and older relatives may have the best intentions in passing on to us the beliefs, traditions, and thinking that they have practiced all their lives. But there are times when you would need to use your common sense, exercise your best judgement, and figure out if their advice is actually worth following.

Because while they want the best for you, sometimes their “best”and your “best” may not be the same.

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