Ep.202: The Best Approach to Handling Your Finances

Why do Filipinos have a hard time saving and budgeting?

Fitz: This is related to my podcast. My podcast is entitled, The 80 Percent, which is inspired by what Dave Ramsey said. He says that financial success is 80% behavior and 20% head knowledge. A lot of Filipinos, they just focus on the 20%. They know that it's important to save. They know that it's important to track their expenses, to spend less than what they're earning, and it's important to create a budget. But they failed to study the 80%, which is really developing a daily habit that will help you achieve your goals.

A lot of Filipinos have a hard time saving and budgeting because they focus too much on the goal of having savings. They focus too much on creating a budget. But they don't really give time to ask themselves, why do I want to do this? Because having a good why or knowing or reminding yourself the reason why you need to take care of your finances is a good motivation. A great motivation into having the patience and the persistence into building your money management skills.

One reason also why Filipinos fail is because they don't save for a goal. So again, having a goal is very helpful when you're trying to manage your finances. A lot of people, they just know that I need to save money. But you have to ask yourself, why do you need to save money? One of the studies that have shown is that when you're walking in a mall and you see a sale, so you will be tempted to say, “Oh, I will buy new shoes. There’s a sale.” But you also have to remind yourself that you need to save money. So between a shoe, a new shoe, and a vague concept of saving money, for sure, buying those shoes will win because it's a concrete thing and our mind is set to go for that instant gratification.

But if you set a concrete goal for yourself, like you want to save money because you want to buy an iPhone, for example. Again, nothing wrong with setting those types of goals. Now, when you're walking through the mall and you see a sale that, oh, there’s a shoe sale, but you also know that you're trying to save for a new phone, for an iPhone. You just have to ask yourself, which is more important for you, saving money so that you can buy that iPhone or buying those new shoes?

At the end of the day, there's no right or wrong answer here. What I always emphasize is you have to be aware of the motivations that you have. And if you believe that it's more important for you to buy those shoes, then you have to accept the fact that you won't be able to buy that iPhone that you want. So it's all about being aware of our decisions, creating systems and processes in how we live our life so that we can build that 80% behavior, that 80% mindset that we need to achieve financial success.

So I think that's what's really missing among Filipinos. We just tell ourselves that it's important to do this and that, but we don't spend that much time into studying the why, the reason why we want to do that. And the how, how do we achieve those goals? So that's my answer to that question.

Youtube: https://www.youtube.com/leadershipstack

Join our community and ask questions here: from.sean.si/discord

Facebook: https://www.facebook.com/leadershipstack