The Constant Pursuit of Your Money
Everyone wants a piece of your money: businesses, financial institutions, and even scammers. This is how the system works, and it’s not necessarily wrong since you need the products and services others provide.
They will tempt you, often with things you need or seem to make sense. However, most of the time, it’s not necessary. Learning to decide wisely is crucial.
Allocating Your Earnings
A portion of what you earn should be for yourself, as this is the only way to build wealth and secure your future when you can’t or don’t want to work anymore.
The Role of Debt
Getting into debt is spending money you haven’t earned yet. This means that when that income arrives, part of it will already be spoken for—paying off what you bought beforehand (even if it’s “interest-free”). Consequently, you’ll have less for yourself.
While credit can be a useful tool in certain situations (like buying a house or growing your business), it should be handled with extreme care. Understanding not only the financial conditions of the loan but also how you’ll repay it if things don’t go as planned is essential.
Financial Literacy: Your Best Defense
Financial literacy empowers you to comprehend various financial products and distinguish what genuinely benefits you. Many individuals seek retirement plans without understanding that they’re merely being shown inflation projections, with their real gain being close to zero.
For instance, imagine I tell you that if the annual inflation is 4%, in 20 years, I’ll return more than double what you invested: 2.2 million. It sounds appealing, but in reality, that money will have the same purchasing power as the initial million you gave me. In other words, it hasn’t grown in real terms.
People often fail to grasp that they’re not gaining as much as they think, adjusted for inflation. They believe they’ll receive more but, in reality, are receiving almost the same amount as they initially invested.
It’s vital to develop the ability to understand and analyze different financial products, both investment and credit-related. For example, what does your mortgage truly cost? How much in interest will you pay over the next 15 years? What impact does an advance payment have, and how much can you save on interest?
Many people are unaware that making a small additional payment in the early months of a 20-year mortgage can save more than a year’s worth of debt and tens of thousands of pesos in interest, as they haven’t even seen their amortization schedule.
Safeguarding Against Scams
Every day, I receive calls, WhatsApp messages offering attractive jobs, and emails claiming a bill has arrived or that my account is blocked.
Many of my friends have had their Facebook or WhatsApp accounts hacked effortlessly. Numerous people use easily memorable (but insecure) passwords across various services.
Many of these scam attempts have become highly sophisticated. Learning to protect yourself is essential.
Protective Measures
As mentioned earlier, the simplest way is to avoid clicking on any links that reach you. Always go directly to the company or financial institution’s website. Never engage in unsolicited calls and never share personal information.
Of course, there are exceptions. If you’ve just signed up for an online service and receive an email with a link to confirm your address, it’s safe to click since it’s part of the process you initiated. If you’re making an online purchase and receive an SMS from your bank confirming the transaction, it’s a requested action.
The issue arises when these messages aren’t solicited. Many messages are simply links that install malware on your device (malicious programs designed to steal your information and passwords, among other things). Others redirect you to fraudulent pages where you input your credentials and other identifying information, allowing them access to empty your accounts.
Always use unique, long, and distinct passwords for each online service. A secure password manager is an essential tool for this.
