The “Secrets of the Millionaire Mind” book author Harv Eker once said,
“There is a secret psychology of money.
Most people don't know about it.
That's why most people never become financially successful.
A lack of money is not the problem; it is merely a symptom of what's going on inside of you.”
In the Philippines, out of 100 Filipinos who are at the age of 65, the age where people are suppose to retire:
-45 are dependent on their children
-30 are financially broke
-And 23 are still working
In other words, 98% of these Filipinos at the age of 65 are financially struggling and ONLY 2 are financially independent.
In the world of business and money, we have what we call the 90/10 Rule.
90% of the world’s population fights for only 10% of the world’s wealth. That’s like 90 people competing for 10 loaves of bread.
On the other hand, 10% of the world’s population own 90% of the wealth.
Why is this? Why is it 90% of the world’s population fight for only 10% wealth when they can just be part of the 10% of the world’s population and own 90% of the wealth.
I’ll tell you why:
The rich know things about wealth and money that the middle and poor class don’t. And since the rich know things that the middle and poor class don’t, they think and do things differently. While average people know about Algebra, English Grammar and Biology, the rich knows how money works and how to make money work for them.
The very difference between the rich and the average man is simply their level of FINANCIAL INTELLIGENCE. Simply, the rich are more financially intelligent than the average man. Wealth is simply the byproduct of one’s level of financial intelligence. The higher your financial intelligence, the more money you’ll have. The more financially stupid you are, the more you’ll struggle financially.
And my job in this article is to inform you about the financially dangerous times we live now and to convince you that financial education is very important in developing our financial intelligence so that we can position ourselves in solving our financial problems which 98% of financially uneducated Filipinos face.
The Dangerous Times We Live Today
Whether you like it or not, we now live in a world where ideas on job security, comfortable retirements and financial stability are obsolete ideas. Massive layoffs and the fear of market meltdowns are the new norm. More than ever, being financial educated is no longer optional nor a thing for the rich but a requirement for financial survival and, ultimately, prosperity. Wealth is no longer measured by the money you have but by your financial IQ. Money today is no longer a piece of paper but an idea.
The rules of money have changed. As a business administration student majoring in economics and an aspiring entrepreneur, I believe that in order for us to understand the present, we need to first understand the past so we’ll be in the position to handle the future better. Knowing this, let me tell you a little bit of interesting economic history. During the industrial age or the 19th century, it’s more than enough to get a safe and secure job, work hard, save money and retire comfortably. In America, they called this the “American Dream.” Times were hard during the Industrial Age but if you worked hard and saved enough, you’ll do just great in your retirement. This is because during that time, money was backed by gold. And gold, like any precious commodity is limited in supply. A country during the Industrial Age can only print money equal to their gold reserves. And if a country had a lot of gold reserves, that country was said to be wealthy and powerful. Thus, we have the saying, “he who has the gold makes the rules.” But all of that changed when in 1973 American President Nixon, the most powerful president at that time, broke away from the gold standard because other countries were gaining economic competitiveness by not sticking to the said standard. When President Nixon broke away from the gold standard, so did other countries. Money was and is no longer backed by gold but by a nation’s constitution. In other words the only reason why the one peso we have has value is because our Philippines constitution said so.
Ever since 1973, the value of money has been decreasing. This is very evident in Zimbabwe where to buy a loaf of bread, you’ll have to pay millions of Zimbabwe currency. There are a lot of factors that decreases the value of money but the main reason why the purchasing power of your money in your pocket is decreasing year after year is because of INFLATION. INFLATION can be defined as the general increase of prices of goods and services. And INFLATION has 2 main factors, it’s either the demand for goods and services is too high or the government printed too much money. But the main point in here is the fact, whether you like it or not, inflation will decrease the value of your money year after year. And INLFATION is here to stay for a very long time. In other words, your money is becoming more worthless and you can purchase lesser goods and services every year. Thus we have the quote, “Savers are losers.” Given that inflation is decreasing the value of money, saving, thus, today is an obsolete idea. Ironic but true.
And let me share to you another shocker, according to NEDA, GSIS and SSS failed to outpace inflation. Meaning, if you have a pension plan in here, I’m sorry to tell you, friend, but your contributions yesterday is being wiped out by inflation. If you don’t believe me, just observe those who are retiring and are relying for GSIS and SSS for financial support. What you need to do is not to save your money but to invest it on businesses and financial instruments capable of outpacing inflation. Investing on these requires financial intelligence.
To make this more “exciting,” we have the rise of the internet in the 1990’s. This means that we’re now living in a world that’s becoming more connected and businesses are becoming more efficient. And this means, only the strong shall survive and the weak shall die. Businesses and institutions that are inefficient and bloated are being erased in the face of the earth. To compete, these businesses and institutions need to be lean and mean which takes in the form of cutting bulk expenses such as substantial pension plans and benefits and the hiring of cheap but cost efficient manual and skilled labor. This means that if you’re in a job or planning to get a job, you need to be the best of the best in order to compete with the best of the best. Or else, you won’t survive. You think this is not true? Just check out the number of intelligent and unemployed graduates here in the Philippines and the massive layoffs in America and Europe.
We can expect 20-30 years from now that Philippines will grow economically which is good news to you who have 20 to 30 to live. But the bad news is, like America, there will come a time where the Philippines economy will become inefficient and bloated and experience one of the worst economic downturns of the century.
According to Gresham’s Law of Creative Destruction: what is inefficient and weak will be destroyed to make room for the efficient and strong. The Philippines is not an exception to this law. Some of you may be resting in peace by that time but how about your children and grand children? Your children and grand children who may have subscribe to the ideas of job security, comfortable retirement and financial stability which are obsolete ideas. What will they do if a financial downturn happens and they don’t have the financial intelligence to handle the financial reality they will be in? Will you really rest in peace? Can your conscience bare the fact that you could’ve done something but didn’t because you’re so busy taking care of other things than the future of your children and grand children?
The Solution
The rules of money have changed. With new rules come new problems. And with new problems come new solutions and ideas. The only way to solve our financial problems is to have financial solutions. To provide these financial solutions, we need to be financially intelligent. And to be financially intelligent, we need to be financially educated. More than ever, being financial educated is no longer optional nor a thing for the rich but a requirement for financial survival and, ultimately, prosperity. Wealth is no longer measured by the money you have but by your financial IQ. Money today is no longer piece of paper but an idea.
I don’t care how much money you make or what your net worth is, what matter to me is your financial intelligence. Because I know a lot of people who may earn a lot of money and others who have inherited a vast amount of inheritance but lose them in a matter of years or buried by debt because of low financial intelligence. If you’re financially intelligent, you have a greater chance of surviving and succeeding financially. If you’re financially intelligent, the financial instability of the world won’t matter because you’ll make money regardless of what happens. Your financial future is not dependent on anything or anyone but yourself. You control your life all because you’re financially educated. The solution to poverty is not the giving of money but financial education. With financial education, people will learn how to manage their money well. The solution for people to cope up with the changing world is financial education.
If You’re Financially Educated
Just imagine, if you’re financially educated and you put that education into practice, you’d be able to do the things that you’re passionate about. You don’t need to rely on the government, your boss or your children to take care of you. You own your life! You’d be able to provide the people you love the best in life.
It’s not just about money I’m talking about in here. I’m talking about all the wonderful options you can have in life. I’m talking about freedom. I’m talking about living out your seemingly dead dreams in life. Yes, money is not everything BUT IT IS DEFINITELY SOMETHING! Yes, money can’t buy happiness but so is being broke. Why choose between money and happiness if you can have both? By being financially educated, you’ll have a greater chance of not only to achieving financial prosperity but real richness in life such as the relationships with the people you love, your relationship to your God who intends you to be wealthy in becoming the person you ought to be and more importantly making the world a better place.
Take Action
And you might say, “Who does this kid think he is? Is this for real?” I’ll tell you, I’m a very passionate and ambitious man who believes that I have so much to do and give to the world. I have a lot of dreams and a lot of potentials. And when I really think and become truthful to myself, I can’t achieve my fullest potentials, my dreams and my ambitions by being average. I’ve seen a lot of people who are so talented, so ambitious with so much to give to the world but died with the music still in them. I refuse to bury my dreams and ambitions in the richest place in the world: the CEMETERY where the hopes and aspirations of billions of people are buried. That’s why I’m paying the price day after day after day after day! I’ll be graduating this March and I’ve made the firm decision not get a job. Not that there’s something bad about jobs but no job can me get to the place I want to be 10 years from now. I’ll be investing the next 3-5 years of my life building the business that I’m involved in. Some of you may think that this is a childish idea and may be laughing with the idea. But let’s see who gets the last laugh 5 years from now. I’ve cut off relationships and activities that don’t contribute to my goals. And surrounded myself with big people, with dreamers and adopted a lifestyle of the successful that’s why when you compare me with the average 20 something, I talk, I walk, I dream, I move and I think differently. I walk the road less traveled and I don’t care what people think. Nothing ever happened by thinking small. It’s far better to dream big and win big. I’m a winner and I know that.
But the question is, will you? Financially educating yourself is an unpopular idea. But if you’re really serious with really living life and providing the best life you can provide to the people you love and I mean SERIOUSLY, consider financially educating yourself. Read books, search the internet, interact with financially intelligent people and more importantly practice what you learn. But if you want to live average, do what average people do, hang out with average people, and die average where nobody in the next generation will remember you, DON’T CHANGE ANYTHING!
To end, I would like to share to you this story,
Once upon a time, Juan lives in a village along with his fellow villagers. One day, Juan heard from the radio that a big flood is coming in his village. Then, all of a sudden, hard rain came down and it flooded in a knee level height. Can you guess what Juan did? Being a religious man, he prayed and said to the Lord, “Lord, Lord, save me from the flood. Thank you, Lord!” Then Juan’s neighbors carrying their packed things said, “Juan, lets go! It’s flooding.” But Juan said, “It’s ok. I prayed to Lord already.” So Juan’s neighbors left and went to the nearby evacuation center.
Then all of a sudden, the rain continued hard and this time, the flood was in the chest level. Can you guess what Juan did? Yes, being a religious man, he prayed to God saying, “Lord, save me from the floods. Thank you, Lord!”
Then, a boat passed by Juan and the people in it said, “Juan, lets go! It’s going to rain harder.”
And friends, can you guess Juan said? Yes, he said, “Don’t worry guys. I prayed to the Lord already. The Lord will save me from the flood.” So the boat left Juan.
Then after minutes, it rained harder! Can you now guess how high the flood was? Juan was now standing at the rooftop of his house and the flood was in neck level. But can you guess what Juan did? Yes, being religious guy, he prayed to God only this time it was dramatic and with matching tears. He prayed, “Lord, Lord, if you really love me, save me from the flood. Thank you, Lord.” Then a helicopter came and the pilot told Juan, “Juan, let me save you!” But can you guess what Juan said? Yes, he said, “No, no. I prayed to the Lord already. The Lord will save me from the floods.” So the helicopter left.
Can you guess what happened to Juan?
Did the rain stop?
The rain didn’t stop.
So Juan died but being a religious guy, he went to heaven. Of all the angels, Juan was the ugly looking one because he wore a sad, disappointed face. He then approached the Lord and asked, “Lord, why didn’t you save me from the flood? I’m a religious man and I prayed and prayed! Why Lord? Why?” So the Lord answered, “Juan, didn’t I answer your prayers when your radio announced about the flood, when your neighbors asked you to evacuate with them, when I sent that boat and helicopter to save you? Juan, I love you but do you really expect me to go down to earth and save you personally?”
It’s In Your Hands
Let us not wait for things to happen. Let us wake up to the reality we’re in and let us not rely on our government, our bosses, our children and, even, God to take care of us. Yes, God will do the rest but let us do our part in taking care of our financial challenges by financially educating ourselves.
If you think education is a waste of time and expensive.
Try ignorance and we’ll what happens.
Start your financial education now!
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