A lot of emphasis has been made towards growing your wealth by investing it, something I totally agree with. Investing properly can maximize your savings and when properly undertaken, it should amount to something substantial in the future.

However, the issue on saving money has always been relegated as something that is so basic that it is assumed that everyone knows how to save… but do we? Us Filipinos continue to have very low savings despite that drastic improvement of the economy and our income. In my travels to teach Filipinos not only here but abroad, I am a witness on how low our savings are and how little emphasis we put on savings. When you ask people if saving is important, everyone will agree with you that it is – however, their bank accounts will say otherwise.

Why is it so hard for us Pinoys to save? The culprit is the way we spend. Unfortunately, we have developed a liking towards too much consumerism that many of us have developed a spending problem. People do not save because they spend more than what they should. I know that it may be an overly simplistic statement but that is the hard truth! While I agree that many of us are finding it difficult to save because of low income, there are also many of us with above-average income who still find it difficult to save.

Proper spending will lead to proper savings. When we take charge on the way we spend, savings will automatically follow. Not all spending are the same and we often hear about needs and wants. Yes, that is a very basic concept but it is truly fundamental. Spending on needs is hardly pleasurable – do you know anyone who is excited paying his or her bills? However, spending on our wants will always give us the warm feeling inside, even if it is momentary. Without proper control, our spending on wants and not on needs often causes us a lot of financial problems and in most cases, it can cause us to be in debt.

Here’s a simple tip to get those spending in check –- create and stick to a budget! Again, an overly simplistic approach to personal-finance but it is so important that the foundation of all our financial goals should start with our ability to control the amount of money that leaves us. A budget will do wonders to our financial future because if we are aware of our spending, we can control it better. Dave Ramsey says “before spending paper, spend it on paper” – that’s what budgeting is all about. It is best for you to identify your expenses and start allocating for them properly. Include your want spending in your budget too because everyone needs to spend on something that will give us that warm feeling inside too. Just make sure that your ‘want’ spending has a limit and that you do not go over that limit.
When you know how much you need to spend, including your ‘wants’, you can save better and more consistently. When preparing your budgets, make sure that there is enough money left for savings – you can use a certain percentage as a minimum for savings, like 20% of your income and build on from there.

For those of us who have a difficulty of setting aside an amount of money for savings regularly, I suggest you enroll in an auto-debit arrangement with your bank and make sure that you do not touch that account, otherwise your savings will not grow. When you have built up enough savings, which you can also use as your emergency funds, you can now begin to invest your money to build on your wealth.

Precious treasure and oil are in a wise man’s dwelling, but a foolish man devours it. – Proverbs 21:20, ESV

When dealing with financial issues, one must always be aware of the 3 deadly behaviors that will cause financial havoc and I call them the 3 dangerous money attitudes: Greed, Fear & Ignorance.

Greed has been man’s downfall since time immemorial. When it comes to our finances, greed clouds our judgment and in many cases it can even make us compromise our values. In investing, greed makes one too optimistic on possible returns based on some experience or even the potential of remarkable growth. While the principle of risk & return always dictate the performance of one’s investment, greed will make one go beyond his risk tolerance in anticipation of fantastic yields. In business, greed makes one engage in cut-throat enterprise and often times have collateral damages like ruined business relationships and even legal issues. After all, it is the love of money which is the root of all evil (1 Timothy 6:10). In the movie Wall Street, Gordon Gecko made a famous line that seems to have been the mantra of many… “Greed is good” (‘That greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit’). Well, it is because of greed that there was the recent financial tsunami which almost put the whole world economy into chaos. In fact, the US has yet to recover from their financial crisis which was really a result of greed. Greed is often times the reason for our economic woes. Regardless of how we romanticize it, and despite Holywood’s dangerous seductions, greed is not good.

Fear is not necessarily a bad behavior. In fact, fear allows one to act in prudence and makes us check if we are already becoming greedy. The issue here is too much fear, or crippling fear. Many a times, people would not take any risk at all when it comes to money and they will find themselves with hardly any financial growth because of it. It is a common notion that Filipinos are ultra conservative when it comes to money and to prove a point, one only needs to look at where our money is actually invested – locked in 30 to 90 day short term deposits that give you almost negligible returns. While keeping your capital safe is important, we must also be reminded that inflation is constant and it will erode our wealth. To illustrate, let’s assume that you place your savings in short term placements like time deposits earning 2% p.a. and you don’t mind the low return because safety of capital is your paramount concern and  you will probably keep the money there for maybe 3 to 5 years . Let us assume that during those years, the inflation rate will be at an average of 5%, you are actually losing real value in your money with the erosion of its purchasing power by as much as 3% per year. In the end, you will actually experience a real loss despite having no capital loss. In risk management, risk avoidance is not always a good choice because avoiding risk also means one can’t gain. I really like the Parable of the Talents (Matthew 25:13-40) – it is as a very good illustration of fear.

Just like greed, ignorance is a very dangerous attitude. While people lose money because of greed or too much fear (in purchasing power), people do so knowing what they are getting into. Losing money because of ignorance makes one well, ignorant. It is said that you should never ever, ever, ever, ever put your money into something you don’t understand. It is ironic that despite Filipinos being risk averse (ultra conservative), we are also prone to a lot of scams. Many researches reveals that our FQ or financial quotient is very low as compared to other countries. Financial education, though immensely important, is not on the top mind of our citizens. Schools look at financial education from a text book approach rather than on a personal finance perspective and many homes will not discuss money issues until the family is in severe financial situation. I counseled so many individuals that are in dire financial conditions and most of the time, the core of their problem is ignorance – financial ignorance.

So what is the solution to all these? Financial education and checking one’s heart. We need to live a life of purpose which will keep our greed in check. It is not hard to realize that our purpose goes beyond ourselves, isn’t it (Matthew 6:33)? Overpowering fear is an issue of faith – we need to believe that we are not given a spirit of timidity, but a spirit of power (2 Timothy 1:7). The only fear we should have is a godly fear (Psalms 111:10). As to ignorance, we only need to open our hearts and minds and embrace learning and seek godly wisdom (Proverbs 8:12).

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Since I’ve been posting a outlooks daily, I felt this is an opportune time to do a series break and post some form of an outlook but bot an economic or financial one. There are many factors that affect performances of an economy an industry and a corporation and the here’s what the country’s leading motivational speaker, writer & consultant Francis J. Kong has to say…

Clues or Clueless by Francis J. Kong

The latest CES (Consumer Electronics Show), an annual event held in Las Vegas that features the “hot electronic/digital gadgets” to watch out for this year gives us a clue as to what to expect for the year. Most of the products featured deal with wearable tech.

But here is the problem. All the Smart watches and the fitness tracking device (I wear one myself) is already a saturated market with so many players in the game but the promised demand is not there. It seems that the clue to the new year and what to expect is at the same time clueless as to what would happen this year. One TV news anchor says these companies do not seem to know what to do and are clueless.

Many company leaders are also clueless. They do not know why good people are leaving.  Managers stick to old management behaviour and wonder why there is very little engagement happening between managers and their direct reports. Meanwhile Generation Y hops from one company to another.

Here is what I see for this year…

Many companies registered growth last year but failed to make their targets due to natural calamities both natural and man-made.
Failure to hit targets means no incentive trips, no fancy perks  and people need all the inspiration they can muster in order to reach this year’s goals.Leaders should work double time inspiring the team to do their best and hit targets.

Talent acquisition and talent retention will become major challenges.
HR practitioners are aware of this…well most of them do anyways while others are facing the difficulty of dealing with their bosses who still embrace last century management mindsets and are totally clueless as to how to deal with the dynamic millennials entering their work place.

Leadership Gaps continue to permeate.
Employee engagement is a desired outcome and in many internal studies and surveys, this area needs major improvements.

Creativity and Innovation rules!
Ideas are the currency of the future. Leaders need to generate creative ideas through their people but would they be willing unless they are inspired? The first half of last year was rosy. Growth was phenomenal. I see this year as another year of growth but leaders need to grow their people so they can grow the business. But the tricky part here is for leaders to first grow themselves so they can lead their people more effectively.

This year will carry challenges and growth will not be handed to us on a silver platter. We all just have to work a little harder.

One of the most prominent public speakers in the country, Francis Kong, is the founding member and Director of Inspire Leadership Consultancy. He has extensive experiences in manufacturing and retail and founded one of the most popular clothing companies.

Francis Kong’s extensive work experiences have given him enough credibility making him one of the most sought-after speakers here in the Philippines. He has written 10 books, “The Early Bird Catches the Worm” which now has been translated into the Korean language and “One Day at a Time” which has been given a most favorable review by Channel News Asia of Singapore.

Currently Francis Kong has a daily Radio Program entitled “Business Matters”, which was given a Year 2007 special citation by the CMMA (Catholic Mass Media Awards). Aside from his daily radio program he also writes for the Business Page of Philippine Star every Saturdays and Sundays. He regularly guests every Thursday morning at ABS-CBN’s morning show Umagang Kay Ganda. He conducts some of the best programs of Inspire.