Financial literacy can protect an individual from becoming a victim of investment scams and other types of financial fraud. It also allows you to manage your money wisely, make sound financial decisions, and achieve financial stability.

Gomer Gomez, senior research specialist of Bangko Sentral ng Pilipinas (BSP) North Luzon Regional Office, made this statement before a forum on financial literacy hosted by the Philippine Information Agency in the Ilocos region.

He said financial literacy is the ability to understand and effectively use various financial products such as bonds and stocks, including savings, budgeting, and investing to make informed decisions about finances.

To avoid debt, bad credit, and financial insecurity, Gomez shared habits to achieve financial freedom.

Refrain from spending money on things that are not essential to save.

Remember to follow the savings formula which is INCOME – SAVINGS = EXPENSES.

“Halimbawa, sa pagpasok ng sahod ay mag set aside tayo ng 10 percent o depende sa kung magkano ang pwede nating maitabi bilang savings. Iyon ang ibabawas natin sa ating income. ‘Yong natira ang gagamitin naman natin wisely for our expenses,” Gomez said.

(For example, set aside 10 percent of your salary or depending on how much we can set aside as savings. That is what we will deduct from our income. We will use the rest wisely for our expenses.)

Use your savings for emergencies or invest it to grow your money.

Gomez also noted that rewarding yourself occasionally can amplify your sense of accomplishment and make you happier and more energized to work on your goals.

He also asserted that discipline plays a vital role in budgeting.

“Hindi maganda ‘yong one-day millionaire. Be wise sa pagtatabi ng pera and spend your expenses wisely,” he said.

(Being a one-day millionaire is not good. Be wise in saving money and spend your expenses wisely.)

The 50/30/20 budget rule suggests splitting your income into three categories.

Half of your money should go to your essential expenses; 30% can be spent on your wants; and the remaining 20% should be saved not only for your emergency fund but also for the money you will need to achieve your future financial goals.

By tracking expenses and making a plan, it becomes easier to pay bills on time, build an emergency fund, and save for major expenses.

Financial literacy is also one of the crucial factors that can prevent anyone from becoming a victim of investment scams.

Gomez said that if it looks suspicious or hard to believe, it is probably a scam.

 “Iyong mga scams ay madalas na low risk pero high return daw. Halimbawa ay mag-i-invest ka lang ng P1,000 at sa ganitong week ay magiging P5,000 na kaagad. Huwag kayong kakagat sa ganoon kasi ang pag-i-invest ay hindi biglang yaman,” he advised.

(Those scams are often low risk but offer a high return. For example, you will only invest P1,000 and this week it will turn to P5,000 immediately. Don't get bitten by that because investing will not give you sudden wealth.)

You can file a complaint through the BSP Online Buddy (BOB) by visiting the BSP’s official website or sending a message to the BSP’s Facebook page.

Financial literacy is an investment for a brighter future.

By embracing it, we secure our financial future and contribute to a resilient society.

Together, let us learn and plan for a future where financial well-being is within everyone’s reach. (JCR/AMB/JCDR/PIA Pangasinan)