How to Apply Financial Education with Financial Products

A lot of Filipinos are buying financial products for the wrong reasons.
"I can't say no to my agent because she's my relative."
"I have a surplus of money and I don't know where to put it."
"My friends are investing and I wanted to join too."
Are you one of them?

Financial education is the key
Financial education is the key 
Financial products are designed to solve and meet our financial needs and goals. As discussed in the X-curve concept (see link), there are two major dilemmas in our lives: what if we die too soon or live too long? Whether we like it or not, we need financial products to solve these questions.

1. What if we die too soon?
The solution: Life Insurance.

A lot of Filipinos when they hear the word insurance, most are scared or allergic. "Insurance? That's another expense!" Truly, there is still a lot of market that needs to be educated about the purpose of life insurances. This topic is never taught in schools and results to a lot of people having not so good experiences with insurances.
- A lot are under-insured.
- They don't read their policies.
- They don't understand what they are paying for.
The main purpose of insurance is to protect our income in case something happens to us prematurely. Instead of leaving behind debts to our kids, we give them monetary value. Life insurance is not for us, it is for our family. Thus, it is not an expense but a need.

2. What if we live too long?
The solution: Investments and Long-term Healthcare.

The amount of investments defines our retirement. The faster we build our investment portfolios, the earlier we can retire. The challenge is when people reach age 60 and up, but does not have enough savings and investments, he may retire broke or may work for the rest of his lives. But when a person has enough savings and investments, even at age 40 or 50, one can already retire.

The other challenge is our healthcare needs during our retirement. This is usually what most Filipinos neglect to save. A lot may have investments in properties and businesses, but one major illness could lead to family bankruptcy. One may also receive a substantial retirement pay, but with no savings for healthcare, the retirement pay will be depleted and one may end up retiring broke instead. Our healthcare benefit while employed is just short-term, we need to prepare for long-term care.

To conclude, three basic financial products that everyone must understand and have are life insurance, healthcare and investments. In the coming posts, we will be discussing each one in details.

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