YOUR e-mail messages and comments totally had me floored. Thank you for your interest, thank you for welcoming me to the blogosphere, and thank you for inspiring me. What began as just another interesting project has become a worthy cause.
It’s particularly cool to receive e-mail messages from the 20-something group. Y’all know what it felt like to be a college grad — the whole world seemed to exist to amuse you. You feel like you’ll be 20-ish forever. But read this e-mail from Patrick Mineses:
I was reading your blog, Money Smarts, and became interested in discussing financial goals because I really don’t have any direction on that matter. I guess you could describe me as a typical fresh graduate of the IT industry, lives with his parents, but also tries to contribute to household expenses. I have a little savings that I’ve built up through the years.
Patrick is lucky to have escaped that malady that infects many in this age group: an inability to think about the future. One of the most important concepts in personal finance is time value of money. Yeah, it’s a mouthful (and there are a thousand technical definitions out there) but it all boils down to the fact that those who start early have a bigger chance of retiring in style because they have more time and can consider more options to grow their money. Patrick, time (can you hear Denzel Washington humming that eerie song) is on your side! 
Now, let me transport you to Metrowalk or Eastwood on a Friday night. Chances are you’re going to be eaten by a crowd of latest-mobile-phone flipping call center agents speaking with a New York accent, nursing a Starbucks latte. Some of them would be standing near café entrances trying to finish their cigarette as if they have a deadline. Here’s a challenge and I hope you really do win. Can you find me at least five in this crowd who save as much money as they fork over at Starbucks?
Skipping the daily latte means you save around P150 per day. That translates to P3,600 a month on a six-day working week or P43,200 a year. That can already buy you a decent life insurance policy. Invested over a five year period with a compounding 5% interest, your latte budget can give you a cool P55,135 smackaroos! (Before latte drinkers crucify me, this also holds true for all other things we buy that we can, in fact, live without.)
Let’s look at the not-so-sexy flip side. Around 42 years ago, 1,000 shares in PLDT would have cost P46,000. I know, that must have been a big amount of money back then, but bear with me please. If you were 20-something then, and bought 1,000 PLDT shares, and held on to your shares despite the eruption of Martial Law, the EDSA revolution, the Asian financial crisis, and sold your shares today, that would mean an additional P2.36 million you can spend on all the latte that you want!
Of course, the choice of stock is also crucial and no, I’m not particularly recommending PLDT. You could have invested in a company that turned out to be a dud and now your shares would be worth nothing. But this illustration shows that whatever your choice of investment and whatever the strategy you used, you would have a bigger chance of winning if time is on your side. You can even refine and redraw your plan when it’s not giving the expected results.
Bottomline, it pays to start early. Kudos to you Patrick, and many of you out there who are members of the 20-somethings that are already craving for financial independence. If someone from the Department of Education or universities is reading, please include financial planning in our general education classes. Over at UP Diliman, our kids are really asking for it.
Note: All photos courtesy of the Lopez Memorial Museum Collection of old newspapers.
July 6th, 2007 at 12:28 pm
keyword…
I don’t agree with you in 100%, but you covered some good points regarding this topic…
March 30th, 2007 at 9:56 am
twila: if i remember it right i think it’s possible, (i know of someone who used to talk me into getting one from that company too.) although it wouldn’t be surprising if you won’t get back everything back.
March 25th, 2007 at 1:58 pm
nice blog salve and the rest of the peeps in here . i think all filipinos should be aware about the benefits of financial planning especially to the younger generations it may someday eradicate poverty in our country. im in my mid 20’s now and im worried about my future on how to be financially independent during my retiring years. although i acquire my life plan in PHILAM at the age of 21 and continously paying ti’l now i think this wouldn’t be enough. would it be possible if i can withdraw my life plan and acquire a mutual fund instead since mutual fund has a higher growth ? would it be beneficial? thanks.
March 24th, 2007 at 1:50 am
Salve,
Nice blog, and love this post especially. There are a lot of things we can do to optimize our savings, such as bringing baon for lunch and merienda (which I now do). There are now days that I only spend P15 (for parking)!
Keep it up, you’ve gained a loyal reader
March 19th, 2007 at 9:41 am
Mickey, you are right and in my post i asked people to bear with me on that. The 1065 issue of Manila Chronicle that I unearthed at the Lopez Memorial Museum had PLDT’s complete trading info that is why I used it. Next time I go there, I will try to look up other companies too :).
March 19th, 2007 at 9:38 am
David V., your comment blew me away. I agree with you, totally. This is a dream that should infect every Filipino. This is a dream that should reach the top leaders of our country. You know, I got an idea from your posting. What do you think about inviting Education Secretary Jesli Lapus to our blog and responding to your comments on adding financial literacy to our curriculum? He was a banker before so this is familiar ground to him.
March 19th, 2007 at 9:33 am
hi bro deyro! thanks for visiting my blog. no i don’t teach anymore, but i do miss it very much. hey we need your insights from Palawan. Simpler life, more savings I hope. How are Palawenos when it comes to saving for the future?
March 19th, 2007 at 9:30 am
hachiko, thanks for pointing that out! its important to know that earnings from stocks include not just gains in stock prices but dividends too.
March 19th, 2007 at 9:28 am
hi femaad, your comment really makes writing, investigating, interviewing, and those countless hours of punching phone buttons to reach sources all worthwhile. thanks so much. you amaze me with what you have done so far. keep it up and do share your technique and tips to everyone
March 19th, 2007 at 9:24 am
hahaha! I can die happy now knowing that article has reached at least one :). thanks for dropping by!
March 19th, 2007 at 8:10 am
Bleh - i spend daily on starbucks and I only realize how much i’ve spent at the end of the month, hahaha.
Nice blog man!
March 17th, 2007 at 5:53 pm
i agree that a personal finance course should be included in the curriculum, probably as early as grade 5!
no one in the family was ever taught because our parents, though high-earning professionals, were’nt financially savvy, too.
i only learned 2 yrs ago via books (pera mo, palaguin mo, millionaire next door, etc) and tried as much as i could to put their priniciples into practice. amazing really how much one can set aside to save and invest when one has the mindset to do so. my husband and i were able to save an amount substantial enough to buy a townhouse cash, and we still have an ample amount reserved as emergency money to last us a year; plus, we have a little invested in blud chips and mutual funds.
i wish i learned all this earlier : then i wouldn’t have upgraded my phone every 6mos; i wouldn’t have bought those shoes/bags/clothes w/c i barely use anyway; i wouldn’t have bought all those foreign magazines, etc
still, i’m glad i learned, even if this late (i am 48 y/o). am now teaching my daughter…it’s up to her to put it into practice or not.
thanks a lot for starting this blog!
March 14th, 2007 at 9:15 pm
If you consider the 100% stock dividend PLDT paid in the 1990’s, your 1,000 shares in 1965 will now be at least 2,000 shares worth P 4.7 million excluding cash dividends.
BTW, a CNN Money article cites an item far more financially damaging than lattes… EXPENSIVE CARS!
March 14th, 2007 at 12:58 pm
i left the world of economics and finance since 1988. i have to relearn all these stuffs. and since salve is a principle based teacher, i would like to enroll myself to her university (this bog! of course.) i will be a third party observer muna. then make sensible comments when the light of understanding visits my brain.
(do you still have time to teach seminary?)
March 14th, 2007 at 2:20 am
I would like to comment on the issue of adding financial literacy in the educational system in our country, because I have 2 kids (grade 1& 2). I really hope and would like to contribute efforts to make our Government, Teachers and Parents to see the need and implement the change. For I have contemplated on this for so long and I believe it will take these 3 pillars for it happened.
I remember the days in grade school when parents and teachers alike would ask students what they want to be when they grow up, I remember each one of us would raise our hands and proudly say; I want to be a doctor!, I want to be a pilot!, I want to be an engineer!, and so on and so forth. The parents including mine would be so proud of our answers and the teachers satisfied for getting the kind of answer they expected from their students. I am 42 years old now, employed as a hardworking OFW, but more enlightened in life and the difficulty of it. Now, I can say and strongly believe that all that mindset exercises of be this be that is lacking if not flawed (at lease in my own opinion).
Time has changed, yet the educational system remains the same, before Juan sets up a sari-sari store to sell to his neighbors, now Juan needs to setup a sari-sari store to sell to his neighboring countries or he wont survive.
My dream is, I would like to see the day when young kids (especially mine) when asked what they want to be when they grow up? Their common answers would be; I want to build my own hospital!, I want to build my own airline company!, I want to setup my own engineering firm!…etc. Where degrees are secondary goals use to support the primary goal which is either to become a businessman or investors in their field in the end, and not to become an employee until the body is worn out and could not take it anymore.
Some “pilosopos” would tell me that if all Filipinos are business men and investors, who would be their staff? Well my answer to that (also in the “pilosopo” way) is; “well we can hire workers from the Middle East to be our engineers and nurses from the USA (not unless they take their exam twice)…..Isn’t that great?!
I read the speech of Mr. Gokongwei in the web and since he started his business career in the age of 13, his mindset never got poisoned by the educational system. Yet he has taken his children and his children’s children out of the rat race long before they were born. Isn’t that what we all wanted?
I am a pure bred and genuine product of our educational system; up to know I am trying to get myself out from the mindset of being a hardworking employee to a hard working businessman, but up to this time even after 20 years of excellent employee career, I do not know how to become or start a business at all! Worse, is that all I got is fear, fear and more fears to share to any one who likes.
Anyway, I need to end this long comment so I can return to my work of making my employers and their families richer and happy. I would like to share these words from Charles Darwin:
“It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change”
I wish something can be done soon.
David V.
March 13th, 2007 at 10:10 pm
how much is the present worth of completing a 5-year college course including daily expenses? and how much is the present worth of net income until retirement? 20 years ago based on 12% cost of money and low salary prevailing at those times, it is just about breakeven. can anybody do the financial calculation for the present situation?
March 13th, 2007 at 7:44 pm
qwerty, i really hope they would include personal finance as a GA subject. The students really need it :). Check out the forum at the UP Diliman website.
March 13th, 2007 at 7:43 pm
Hi pinggay, thanks for dropping by. I would be lucky if I can find someone as passionate as you on financial literacy :). Chiz is so lucky to have you and Pat as his parents!
March 13th, 2007 at 7:43 pm
Hi Mark, you’re right. In fact, in other countries, children learn about personal financial management as early as grade school. Calling Jesli Lapus…
March 12th, 2007 at 5:09 pm
[...] make the latte habit almost pale in comparison — our INQUIRER.net business editor Salve Duplito should tell these [...]
March 12th, 2007 at 9:53 am
Hey Ambe! I am so proud of you! This new medium will allow you to break financial planning into the consciousness of many Filipinos. We need that. I just wish your discussions can especially reach the low-medium income earning Pinoys, those who are in the cyclical maze of getting a pay on the 15th just enough “panggulong” until the 30th. I wish there was more we can do than just make both ends meet. A friend of mine in Sweden gets paid 1,000 euros for a 500-word write up. Unfortunately opportunities for high paying white-collar jobs like that are not as abundant in our midst. I think there is in our country an imbalance between our industry as a people and a compensation that makes a dent on our bank account. So we need financial planning to make each of our hard-earned peso count! Kudos for this blog, Ambe!
Pinggay
March 12th, 2007 at 9:26 am
Hmmm, that PLDT comparison just doesn’t cut it — why not pick a different stock for your comparison?
My dad earned P1,000/month out of college, and that was already considered a “high” salary back in 1977. Now imagine how much P46,000 was in real terms back in 1965…
March 11th, 2007 at 2:58 pm
I have a nephew who, at age 7, is already proving to be a spendthrift. He’d usually spend whatever remains in his pockets over useless toys and stuff that he would find outside his school’s gates. When my sister observed this, she immediately took measures in order to suppress the habit and get my nephew to start saving. Of course, a 7-year-old wouldn’t understand financial planning, much less care to practice it. But it’s never too early to shape anyone’s spending habits; and I guess the responsibility starts pretty much within the family. Of course, I do agree that it’s about time that the school system take part of this responsibility. In fact, I’d say why wait until college? Tackle it as part of HeKaSi or whatever they call it now.
March 10th, 2007 at 10:27 am
“Over at UP Diliman, our kids are really asking for it.”
and rightly so. considering that graduating from a good school gets you more chances of landing a good paying job, it’s definitely important that those kids get to apply financial smarts early on. it’s nice to know that kids these days realize the importance of financial planning.
March 9th, 2007 at 10:19 pm
Why don’t u use na lang “Rule of 72″ in your illustration (which is used by people avert to using the financial calculator or excel).
Hence, if you invest in an intrument (perhaps a balanced mutual fund) with 14.4% average annual return, your 43,200 will double in 5 years!
(This illustration is not only more CHALLENGING than using 5%…it is also realistic considering that a balanced fund usually delivers that return.)
Best regards classmate! Misya
March 9th, 2007 at 9:17 pm
hi angie! thanks for pointing this out. made the corrections immediately. didn’t use my financial calculator kanina, and made some errors in my excel worksheet. guys, angie is my tutor in time value of money in our financial planning class. buti na lang she is very generous in sharing her talent.
March 9th, 2007 at 7:49 pm
Hi Salve!!! Hey, how did you get your figures??? Your 43,200 won’t become 87,885 after 5 years if invested at 5% p.a. You need 15.262%. At 5%, you will have 55,135.36 after 5 years.
Since nag-”more-than-double” ang 43,200 mo, without using a financial calculator or a computer, if you simply use the “Rule of 72″, your P43,200 will double in 5 years at 14.4% (72 divided by 5)…or, it will double at 5% p.a. in 14.4 years.