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.
27 Responses to “What latte can do to your finances”
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Pages: « 6 5 [4] 3 2 1 » Show All
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.