A sure foundation for Financial Literacy

What is the foundation of financial literacy?

According to a survey conducted by the Standard & Poor's (S&P) Ratings Services, only 25% of Filipino adults are financially literate.[1] This means that 3 out of 4 adults we meet everyday do not know how to manage their money. But how would I know if I am financially literate or not?

There are different definitions of financial literacy because it is a broad topic. But most financial gurus would agree that being financially literate is knowing how money works and how to apply that knowledge to our own advantage especially in important financial aspects such as "investing, insurance, real estate, paying for college, budgeting, retirement, and tax planning."[2]

Financial Literacy and Stewardship

I agree that we need to understand how money works and how to make right decisions in financial aspects mentioned above. But why should you pursue financial literacy anyway? As a Christian, I believe that financial literacy is more than just knowing about money and how to use it to our own advantage. These are important. However, there has be a solid foundation for our pursuit of financial literacy.

Here's my view:

"Financial literacy should be rooted in the knowledge that you and I are just stewards who will be accountable to God for how we managed our resources."

[Read Jesus' parable in Matthew 25:14-30].

We all entered this world with nothing and we will all leave this life with nothing. Whatever you have right now is not by your own strength and ability. Suppose you were able to climb the corporate ladder and achieve the salary you've always dreamed of and can now buy almost anything you want in life. Can you say that you are a self-made man or woman and that your success is of your own doing?

I am sure that on your way up, there were people who stood by you, encouraged you, and helped you succeed by giving you opportunities to grow. There were those who lent you money and gave you food or shelter when you had none.

Most of all, the life, strength, and time, you have now are not your own. Whenever you close your eyes to sleep, you have no idea if you will still wake up and continue your plans and ambitions for tomorrow. We can't be 100% sure that our strength and brilliance will remain.

Genuine opportunities also come and go. You might think of delaying a life insurance offer now since you are convinced that you can do it next year. But are you sure that you are still insurable by that time, let alone, alive to protect your family's income?

Even if your investments are doing well there is no guarantee that the investment market will remain profitable. The global economic collapse of 2007 should remind us that future profits are never guaranteed. They can be lost in an instant.

Here's my point: financial literacy begins with the understanding that time and or money are not at our disposal. We are just stewards and will give account to God for how we handled these resources.

How to Handle Money this 2017 and onwards

So, as we begin the first days of 2017, here's few recommendations to help us start managing our time and finances better.

1. Live a life of simplicity and contentment - nothing beats a life that is less complicated. A person with enough resources can sleep better than one who has a lot of riches to worry about. One of the richest persons in ancient history once said: "The sleep of a laborer is sweet, whether they eat little or much, but as for the rich, their abundance permits them no sleep" (Ecclesiastes 5:12).

2. Prepare for emergencies and for future needs - Since time and money are not at our disposal, make sure you set aside money for emergencies. Many are afraid to talk about sickness, accidents, and even death. Whether we like it or not, prices of goods and services increase every year while our earning capacities diminish. These are realities we cannot escape. The best is to prepare for them like having a college fund (for parents with kids), a retirement plan, and an insurance policy to create money in case we are taken out of the picture. The ants are wise enough to prepare food in summer to have enough supplies for the rainy season (Proverbs 30:25). Let's learn from them.

3. Plan your expenses - In order to save money, stop habits that drain your resources. These include shopping sprees, impulsive buying, or using credit cards. These are ingredients to personal bankruptcy. Instead, start forming the habit of planning expenses. Create a budget and list which expenses are really important and which can be set aside for the moment. The priority is to make priorities the priority.

4. Put people over money - In this consumption-driven world, many are willing to compromise relationships with people just to get money. Many would even leave their spouses and children for years just to work abroad and earn the salary they want. Yes, we are living in an imperfect world. But they are ways to earn money without sacrificing important family relationships. Money is just a tool for us to have decent lives and healthy relationships. It should not be the end goal of our efforts.

5. Give - It is always noble to share our resources with others. Giving destroys the habit of selfishness and apathy. It allows us to see ourselves as interconnected with others in society. But let me balance this principle. As a steward we have to be wise when we give. I mean, it is not good to give to people whom we know are lazy or those engage in illegal and immoral activities (e.g. drugs, gambling). A good way to give is by generously supporting your local church or a legitimate organization which you know is helping those who are less-fortunate in life.

You can think of other ways to handle your money properly. But be sure that you are driven by the understanding that we are just stewards of time and money and that will give account to God. Starting 2017, may we all succeed in everything important in life!

Notes:

[1] "Only 25% of Filipinos financially literate - S&P," The Manile Times. 2 December, 2015. Accessed 2 January 2017 <http://www.manilatimes.net/only-25-of-filipinos-financially-literate-sp/232428/>

[2] "Financial Literacy," Investopedia. N.d. Accessed 2 January, 2017 <http://www.investopedia.com/terms/f/financial-literacy.asp>