Money is Fungible (6 Takeaways and 6 To Dos to improve FQ)

Money is fungible. Money that is raised or intended for one purpose can easily be used for another.

I remember back in the day when I was still a banker, I would be part of long documentation meetings where the lender would require numerous things to make sure that the borrower would use the amount borrowed for the project which was approved for funding. Because no matter how great your financial projections are, if the money is diverted to other use, repayment can be in trouble.

In our heavily OFW dependent country, we’ve heard a lot of stories where this fungibility nature of money is being abused by relatives back home who would ask for money for a certain need but end up using it somewhere else, much to the pain of the OFWs. It is this pain that Beam and Go tries to help the OFWs address.

How I Met Your Mother

I am not talking about that American sitcom that my sons were very fond of, but how Jonathan Chua, the founder of Beam and Go, found me. He was surfing on the net about parenting (he has a four year old daughter) and he chanced upon my articles and became interested in them, including the financial literacy part. And so he got in touch with me via email to do some collaborative work with his company. (I continue to be amazed with the blessings brought by the net, particularly finding like-minded individuals and corporations you can work with). Jonathan was a Wall Street I.T. guy who is now residing in Singapore. His other firm is Duration Inc., a software product development company. The other co-founders of Beam and Go are Mariliese Tan, the one who came up with the idea and whose work experiences include audit at KPMG, sourcing, sales and marketing and start-up accelerator, and Albert Go whose background is marketing and communications here and abroad with a dose of (CSR) Corporate Social Responsibility and community sustainability.

What interested me in their firm is that they are heavily incorporating financial literacy in their marketing. They see the plight of OFWs all over the world about not being in control of their pera padala, not to mention the long lines they have to endure and the high fees they have to shoulder. They came up with this online platform that enables them to provide for their families in the Philippines by directly purchasing gift certificates that can be texted to the recipients’ phones. (The cellphone penetration in our country is over 100% so they find this the best medium). To our OFWs check out how this facility can help you take care of your families back home in a better way by clicking this link.

Takeaways from our Family FQ Workshop in Iriga:

We have held our family workshop to a wide variety of audience. Probably, the income bracket of our audience is as wide as the income bracket of the entire country, as we already had a version for the rich business owners in Balesin Island two years ago and this time around a version for the constituents of Iriga, a small city in Camarines Sur, Bicol. We tweak our presentations in order to be relevant to the audience and we end up learning more and more as we “tour” this workshop from one group to another.

For the Iriga City run, our family was very happy to see the majestic Mayon Volcano. It was a first for me and our three sons. The Irigenos were the usual warm hospitable Pinoys who take pride in their almost zero crime rate and laid-back lifestyle. By the way, Iriga is the hometown of our superstar Nora Aunor who, according to our tour guide, was the precursor of the bottled water business! If you recall, Ate Guy’s humble beginnings trace back to the riles ng tren in Iriga where she sold water. Incidentally, there are over 30 natural springs in Iriga.

Left to right - Beam and Go Founder Jonathan Chua with the Fausto family Anton, Marvin, Enrique, Martin and the author posing by the majestic Mayon Volcano. 

I wish to share our family’s takeaways from the workshop in Iriga. I asked each of the boys to give their contribution to this list.

The Family FQ Workshop in Iriga – The Fausto Family with former Mayor Madel Alfelor-Gazmen and Mayor Gang-Gang Alfelor. 

Over 500 Irigenos who attended the workshop. 

1. Rich or poor, families have challenges learning and teaching about money because it remains a sensitive topic to discuss casually.

2. Rich or poor, parents just want to provide well for their children.

3. People across social classes tend to assume that the current cash flow will always be there and so they tend to forget that the basic law of setting aside (Pay yourself first.) is really a must.

4. In the province, not having a bank account is very common. Well, we should not be surprised. In the CNN Phils Report on Filipino Savings, it’s stated that as much as 69% of Pinoys have no bank accounts! This figure is way higher than the global average of 38%, the developing economy median of 46% and the East Asia and Pacific average of 31%. In the poorest 40% of our population, this goes up to as high as 80% of adults with no bank accounts.

5. Context is very important. In the simple lives of our Irigeno-participants, we learned that the concept of passive investing is new to a lot of them. It was our privilege to introduce COL Financial to them by way of raffling off a starter kit as a prize. Before our workshop, almost all of them had not heard of the largest online broker in the country. Understanding their context made us aware that even if they just bring home the first basic law of money – Pay yourself first – that would already be an achievement. (According to the mayor, it was the first financial literacy workshop in their city and they’re looking forward to having more.)

6. The simplicity of our presentation of the three basic laws of money and the fun factor that we add to our workshop are a great way to catch their attention and inspire them. (Thank you very much for your glowing feedback.) Nonetheless, the bigger challenge is in bringing home the lessons and actually applying them in a sustained manner.

What to do

Given the above takeaways, I wish to put forward some suggestions, some are my lofty dreams, to all the people who can do something about improving the collective FQ of our country.

1. Institute guidelines to increase bank account penetration. The very high 69% of population with no bank accounts is quite alarming. Heck, how can a relatively new gadget called cellular phone have over 100% market penetration and an over a century old banking system only have 31%? Having a bank account is an important initial step to one’s financial freedom. Maybe Bangko Sentral ng Pilipinas can look into the possibility of enticing banks to offer the no minimum balance and low opening amount, which are currently available for kiddie savings accounts, to a wider segment. A lot of people still shun opening bank accounts because of the minimum balance requirements and the dormant account penalties. Anyway, a lot of things are now done online and the cost of maintaining these accounts may not be that significant anymore.

2. Parents, open a savings account for your children once they are born. I suggest that banks give a special gift or any incentive to parents who open a savings account for their children within the week they are born. This may sound too much to some, but why don’t we have a bank application form attached to the birth certificate forms that we have to fill out so that we are reminded that one of the best gifts that we could give to our children is to open a bank account once they are born! Making things easy breezy in the form of incentives, discounts maybe on the hospital bill that can only be used as initial bank deposits to the newborn baby’s account within the first week? What do you think?

3. Pay all salaries through payroll bank accounts. This would force the employee to have a bank account. I remember during my first job as a Credit Analyst at Far East Bank when our salaries in small brown envelopes with cash were brought to our department by the bank teller together with a security guard for distribution every 15th and 30th of the month. Soon after, it was made through our Far East Bank savings accounts. Some officemates didn’t like the arrangement but honestly, I welcomed it because it made my regular savings easier for me.

4. All employers should have a default saving and investing facility as part of their standard benefits package. I wrote about the concept of Libertarian Paternalism in a previous article entitled Only 6% of those who learned about Financial Literacy Improved financial behavior (So what do we do about that?) I long for the day when all employers would have this default feature once they sign up their employees, and that the wording should be “opt-out” instead of “opt-in” so that the employers are able to “nudge” their employees towards the decision that’s beneficial to them. I hope that the Personal Equity Retirement Act (PERA) by the BSP will be implemented by all concerned with “nudge wordings” in mind.

5. Have that investing facility portable. It would be great if that default investing facility that an employee starts with in one company were portable so he could continue his saving and investing until he retires.

6. Investments to be purchased in the form of GCs. I have tried to give our godchildren shares of stocks as gifts for Christmas and birthdays but I encountered difficulty not only with the opening of accounts (documentation requirements for In Trust For - ITF - accounts) but also with the recipients’ inability to deposit the cash dividends earned from their stock investments. Some banks do not accept checks in ITF form, so I stopped. I hope we will have something that can be easily purchased like GCs specific to investing that we can easily buy and give to our loved ones. I hope Beam and Go will have this kind of GC as part of their online products soon. There may be challenges with AMLA (Anti-Money Laundering Act) and KYC (Know Your Client) requirements, but I guess these kinks can be worked out.

Money may be fungible and we may have difficulties paving the way to a happy financial journey, but involving the entire family and setting goals together may ease the pain and bring more meaning and zest to this adventure of having a high Family FQ!

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ANNOUNCEMENTS

1. Thank you very much to Beam and Go, Mayor Gang-Gang Alfelor and former Mayor Madel Alfelor-Gazmen for inviting us to Iriga City. Click this link to watch the Family FQ Workshop in Iriga Video.

2. I will speak at the 6th PANA (Philippine Association of National Advertisers) Foundation IMC Youth Congress on November 27, 2015 at the Philippine Trade Training Center, Sen. Gil Puyat Ave. cor. Roxas Blvd., Pasay City.

Rose Fres Fausto is the author of bestselling books Raising Pinoy Boys and The Retelling of The Richest Man in Babylon. Her new book is the Filipino version of the latter entitled Ang Muling Pagsasalaysay ng Ang Pinakamayamang Tao sa Babilonya. Click this link to read samples of the books. Books of FQ Mom Rose Fres Fausto. She is also the grand prize winner of the first Sinag Financial Literacy Digital Journalism Awards.

Attribution: Images from renewablewealth.com, obreal.com, Tom Acuesta and the author put together to help deliver the message of the article.

This article is also published in FQMom.com and RaisingPinoyBoys.com.