So, you’re now in your 20s. Congratulations on getting out of the rough world of teenagers!
Sorry to be a bummer but… It’s just going to get tougher from here on out. For example, have you ever realized that you now have money-related questions that nobody seems to know the answers to?
We sure do have a lot. Why weren’t we taught these at school?
Fortunately, we’ve done the legwork and found the answers to all these questions. What follows is more than an answer to questions that we, and the people around us, ask the most; it’s also a sort of introduction to a new part of our lives.
Here are the answers to 20+ money-related questions you should ask in your 20s.
20 Money Questions to Ask in Your 20s
1. What should I do with my first salary?
Finally, you’re now a legit adulting Pinoy! So, what should you do with your first salary? Save it? Invest it? Actually, you don’t have to think about it too much. Everybody deserves to enjoy their first salary. And if enjoying your salary means treating your parents to a lavish dinner or buying that thing you’ve always dreamed of, then so be it. You’ve worked hard to reach this far, you deserve the reward. You can always start saving next month.
Read More: 7 Things to Do With Your Salary
2. How can I save if I’m still a student?
Just because you’re a student doesn’t mean you can no longer save money. If you’re receiving an allowance from your parents, you can always save some of it to your bank account or alkansya. And if you need extra money, there are always side hustles and gigs that you can do in your free time — yes, even if you’re still a student.
3. How can I be financially secure?
There’s no exact formula for financial security, but you can start the journey by religiously following two rules: one, always spend less than you earn, and two, never spend money that you don’t have. More than those, it’s also important to learn the fundamental skill of budgeting.
4. What are some budgeting tips for a minimum-wage earner who lives alone?
We get it. Budgeting can be tough when you don’t have–or perhaps don’t earn–enough money in the first place. In reality, though, budgeting can help you determine the best ways you can maximize your resources, even if you’re only earning minimum wage right now. Here are the top 3 pieces of advice that will immediately improve your budgeting: prioritize, make it difficult to overspend, and track every peso. Of course, there’s a lot more to these than you might think, so make sure to read up on our detailed guide to budgeting down below.
Read More: The Ultimate Guide to Budgeting
5. How can I save on bills?
Sometimes, it can feel like you’re working hard every month just to keep up with your monthly bills. If you’re in this kind of situation, you’re bound for a tough time — you’ve got to keep your bills to the minimum. You have to be mindful of everything; from water to electricity to gas. Make sure you’re not paying for unnecessary subscriptions (do you really need Netflix?) You can also use debit or credit cards which provide cashback for bill payments for a little boost.
6. When will I get taxed, and how much do I get taxed for?
If there’s one crucial thing I never thought I’d have to learn as a kid, it’s taxation. But we have to face the facts, and facts are you have to pay your dues. The country has strict rules for the taxes its citizens have to pay, and breaking these can cause some dire consequences. That’s why we’ve got an in-depth guide to taxes here on Adulting Pinoy. But for now, there are three things to keep in mind: 1) we all pay VAT for every purchase we make, 2) you have to file for income tax once you start working, 3) you don’t have to pay anything if you earn less than 250,000 PHP a year.
Retirement and Insurance
7. When should I plan for retirement?
You know that old saying: the best time to start was yesterday; the next best time is today. In other words, plan for retirement as soon as you can! It’s only prudent to have a clear idea of how you want your retirement to look like. What will be your source of income after you retire? Will it be enough to sustain you and your 14 cats? (or dogs!) Will social security cover it, or will you need more? If so, how do you go about achieving that kind of income? Answering these basic questions will get you a long way.
8. Do I really need life insurance? At what age should I get one?
Dying isn’t a fun thing to think about. However, ‘adulting’ means taking on responsibilities, and it’s your responsibility to make sure that your loved ones will be financially covered even if you die. The more dependent they are on you and your income, the more this becomes important. For instance, if you’re 29 years old with a stay-at-home wife and a baby, then it’s pretty much a ‘need’ to get life insurance as soon as possible. If you’re 22 years old and still living at home with your working parents though, then you may hold off getting insurance for a few more years.
9. What makes a good life insurance policy?
There’s no one-size-fits-all formula when it comes to insurance policies, as these things have to be tailored to your specific situation for maximum value. However, there are factors that you can look into when shopping for a policy, such as affordability, payout policies, underwriting, payment methods, conversion, and living benefits. Make sure to do your due diligence when researching these factors. You can then use them as benchmarks to find The One.
10. What are the best insurance companies in the Philippines?
So you’ve made your peace with your mortality, made up your mind, and now you’d like to be insured — great! But which one should you choose? Worry not. The Philippines Insurance Commission ranked the insurance companies in the country based on their Quarterly Reports on Selected Financial Statistics (QRPSFS), which includes figures such as their revenue, net income, paid up-capital, etc. According to them, the top insurance company in the Philippines is Sun Life, Axa, Pru Life, Phil-Am Life, and General Insurance, and BPI-PhilAm Life Insurance.
11. Are there any affordable insurance plans for low-income earners?
There are plenty of insurance plans suitable for all levels of income. The most affordable plans are what we call “term insurance.” This is a type of plan that only insures you for a certain period of time, also known as a term. The upside is that it’s extremely cheap. The main downside is that you have to renew it every time you finish a term, which always results in a price increase. That said if you’re a low-income earner whose only concern is making sure your family is left with something when you die, term insurance is certainly enough.
12. Is it advisable to get HMOs in addition to health insurance?
HMOs, which stand for Health Maintenance Organization, are very different from health insurance. HMOs are more suitable for situations where you need to visit a doctor for an emergency. They’re typically paid per year and have to be renewed. Health insurance, on the other hand, are suited for big-expense illnesses or hospitalizations. They have flexible payment terms and don’t have to be renewed. If you have some budget to spare, we recommend getting both as they can be very beneficial in the long run.
13. What is investing?
Investing is a broad (and interesting!) topic, but it can simply be thought of as allocating resources with the expectation of future profit. Investing can be everything; from your aunt’s online selling businesses to property to stocks, and is accessible to everyone. The term investing gets a bad rap, especially here in the Philippines, because of its association with get-rich-quick scams and pyramid schemes. Although there are relatively stable investments, it always carries a certain measure of risk and takes some time to mature.
14. How do you start investing?
Now we’re asking the real questions. In theory, this can be anything you put money towards with the expectation that it will grow more money in the future. With this definition, your bank’s savings account is already an investment. But in reality, you want to maximize your resources. You should opt for an investment that balances risk, accessibility, and future profit. In this sense, some of the most accessible investment vehicles for your money are funds, stocks, and real estate.
15. Can loans be considered an investment?
The short answer is yes: loans can be considered an investment if you use them the right way. Businesses routinely take out loans if they feel like the return on investment (ROI) outweighs the monthly payments needed for the loan. Under the same principle, you can take out a loan if you’re sure that it will bring you more value than what you paid for it. However, this is a very risky move and is best considered only if you’re extremely sure of the outcomes.
16. What’s the smartest way to invest?
There’s no silver bullet when it comes to investing, and anyone who claims that they have The Formula is most likely lying to get your money. However, you can certainly invest in a way that is best suited to your resources, risk appetite, level of involvement, and goals. These factors dictate what mediums of investment are available to you and how you can go about investing in them. In this sense, the smartest way to invest is relative and should be the one most suitable to your lifestyle.
17. What are investment risks I should be wary of?
First and foremost, be careful about investment scams that pass themselves off as ‘opportunities.’ There seems to be a whole lot of these schemes in the country, and they falsely advertise lucrative business models that are far from reality. Next, consider all of the market factors that will make or break your investment. Even researching basic concepts such as supply and demand, return on investment, monthly costs, etc. will give you a much better assessment of the investment that you’re about to undertake. In all of this, proper and diligent research is key.
17. Is real estate a good investment? How about cryptocurrency?
These two investment vehicles are interesting because they are wildly contrasting in the most important points, such as how long they’ve been around, their respective risks and benefits, and even their technological level. Real estate is a traditional investment and is often more suited for those with large capital willing to make a conservative investment. On the other hand, the volatile and emerging nature of cryptocurrency makes it suitable for those who are willing to go for high-risk, high-gain strategies. In that sense, they’re both good investments for the right kind of people.
18. What is cryptocurrency?
Cryptocurrency is a complex topic, but you can think of it this way: cryptocurrency is money that only exists digitally. Also known as crypto, it originates and is maintained on the internet. You can exchange it for “fiat money” such as PHP, USD, etc. Like real money, you can use crypto to transact, invest, and trade. That said, there are also many risks to using cryptocurrency, so it’s best to do your research before utilizing it yourself.
Read more: The Ultimate Guide to Cryptocurrency in the Philippines
19. What is Bitcoin?
Bitcoin is the first, largest, and most popular form of cryptocurrency today. Launched first in 2009 by a mysterious person (or group, nobody really knows) called Satoshi Nakamoto, Bitcoin grew with the support of many invested developers that lent their time and expertise to its creation. Today, Bitcoin has the largest share of market capitalization, with about 600 billion USD in June 2021.
20. How will cryptocurrency affect our use of money?
Cryptocurrency has the potential to change the way we use and value things because of how it is structured (in theory, central banks can’t regulate them as they do now) — but for the moment, cryptocurrency doesn’t seem to be a threat to major economic systems as a whole. Bitcoin, the largest cryptocurrency to date, only owns a tiny fraction of the world’s money supply. However, things could change if enough people adopted its use.
21. Are NFT or cryptocurrency games real?
Non-fungible tokens and cryptocurrencies are real in the sense that they do exist: their existence is recorded on a decentralized and unhackable (at least for now) system called a blockchain. However, these electronic resources do not have any physical counterparts whatsoever, so a large part of the population still doubts its veracity as a form of asset. Recently though, they are gaining in popularity and economic market share — so regardless of your personal belief, the truth of the matter is that there’s currently a strong economy for both NFTs and cryptocurrency.
Read more: A Quick Guide to Play-to-Earn NFT Games in the Philippines: Axie Infinity, My DeFi Pet, and More
22. What is money?
We usually don’t think about it, but adulting deals with a lot of money. Whether it be budgeting, investing, or simply paying our monthly bills, money flows in and out of our hands every day. Money is a ‘medium of exchange’; a way of converting what we have into what we wish to have. No matter what your views are about money, living without this instrument (ie. barter) would severely limit the things we can acquire and achieve. Because money is such an important part of society, entire institutions (central banks and the economy) are centered around regulating money.
23. How does gold affect a country’s economy? What is the Gold Standard?
The gold standard is an economic model where countries back their currencies with a physical store of gold. This provided many benefits, such as currency stability, controlled inflation, and minimal uncertainties in international trade. However, this model also presented severe disadvantages, such as unchecked inequality and inflexibility to deal with inflation. Because of this, most countries around the world abandoned the gold standard around the 1930s.
24. How are minimum wages determined?
According to the Official Gazette, there are 10 factors in setting minimum wages, which can be grouped into 4 general categories: demand, capacity, prevailing wage levels, and economic and social stimulation. In the Philippines, minimum wages are determined per industry and region, by the Regional Tripartite Wages and Productivity Boards. These Regional Boards study the conditions of their region’s economy and then issue a Wage Order as needed. The Boards can issue Wage Orders once a year, except when there are drastic increases in prices of basic goods.
25. How do banks work?
No, banks are not the Illuminati. On the surface, banking works simply: you lend them your money (through your savings and other accounts), and they use it to make investments and gain profits — some of which trickles down to you (stonks!). There are many ways that you can ‘lend your money’ to banks, such as savings accounts, checking accounts, and even investment accounts made in the bank’s name; all of these place your money in their hands, with the assurance that they will give it back to you with interest when the time comes.
Read more: Top 5 Best Starter Banks in the Philippines
26. Why does the value of other countries’ currency different from ours?
The difference in value between two country’s currencies depends on several complicated market forces such as foreign trade, monetary policy, geopolitics, etc. It’s important to note that trade value is different from numerical value. For example, the Kuwaiti Dinar (KWD) is the highest currency in the world (numerical value), but the American Dollars (USD) is still the strongest when it comes to trading value. The numerical value of a country’s currency depends on how they interact internationally, while trading value depends on how the currency is bought and sold in the Foreign Exchange market.
27. How is currency regarded now? Will it be the same in the future?
From barter to precious metals, and then to paper: the meaning and value of money have historically changed. Thus, it’s no surprise if this changes again in the future — and we’re seeing the cusp of a new era today. Cashless transactions are becoming the norm, especially after the pandemic. Purely digital banks are on the rise. Cryptocurrencies based on dog memes (hello, Dogecoin) are steadily increasing in market share and becoming more mainstream. Although these methods aren’t guaranteed to last, it tells us that the future will likely hold more innovations that will change the way we handle money.
Read more: Top 5 Digital Banks in the Philippines
Money Questions You Should Ask
It’s perfectly normal to have plenty of questions to ask as we grow up and start to navigate adult life. From saving, budgeting, and investing, to credit cards, Bitcoin, and life insurance: more and more we realize that simply living in this world is more complicated than we could ever think.
That’s why asking questions is a valuable thing, perhaps more than the answers themselves. As we get older, more and more we need to get used to actively seeking knowledge.
Of course, the answers are important too – and that’s what we’re here for.
Got any more questions? Feel free to leave a comment below or to contact us on any of our social media accounts!