Financial Education And Misplaced Hope

Financial Education And Misplaced Hope. When we're disadvantaged, we tend to have a jackpot-metality. We think our way out is via a miracle. We don't need to play against the odds to hit the jackpot. If we want to improve our lives, all we need to do is be smart and stay patient.
For me, personally, one of the hallmarks that anyone is financially savvy is when they understand that slow and steady wins the race.

It's a simple enough lesson, and one that's heard or taught to us early in life. However, it's one that somehow gets forgotten when it comes to finances.

We tend to get caught up either with what others have or what we don't have. We see how blessed others are, for no other reason than they were born into that situation. We look at where we are in our lives and we sometimes feel helpless, that we're stuck.

For me personally it boils down to financial education and misplaced hope.

When we're disadvantaged, we tend to have a jackpot-metality. We think our way out is via a miracle.

But in fact, if we were more financially savvy we could understand that the way out - or up - does not need a miracle. It's just hard work, vigilance and smarts. It won't be easy, and it will take a long time, but it's very possible.

And if we were more financially savvy, we would understand that the chances of getting out through gambling (lotto) and get-rich-quick schemes/scams is actually much smaller than we think it is.

While it's true that the big windfall from winning the lotto, or any other gamble, or even successfully getting in and out of a pyramid scam will change our lives, we fail to consider the likelihood of it happening.

You've probably already heard that it's easier to get struck by lightning than win the lottery. And how do we propose to outsmart a professional con-man and get their money instead of the other way around?

And yet there are easier, likelier ways to succeed financially.

For example, if you bet 20 pesos every week for 10 years, and you did not win the lottery, you've effectively wasted 9,680 pesos. You're probably thinking that's not a huge price to pay for the chance to win 100 million or so.

But if instead of betting in the lotto, you saved it. What would happen?

After 5 years, and keeping it in a normal savings amount at the current paltry interest rates. you'd have roughly 4,924.58. A paltry sum, but one you wouldn't have to begin with.

But if after year 5 you invested it in a money market UITF, even assuming that money markets won't ever give a better return than the paltry rates we currently have, you'd end up with roughly 10,743.94 pesos - or 800 more than you'd have if you just kept the money instead of betting it.

Now, that might still sound like a not so bad price to pay for a chance to win the lottery.

But what would happen if you just left that 10+K in an equity fund for 10 years?

Even without adding more money to it, conservative estimates say that your 10,743.94 pesos will turn into 27,867.01 - or more than double what you have.

And that's where it really gets interesting. We're choosing to throw money away, on the small and unlikely chance it might get a big return.

But all along there's a readily available way to double your money - without even having to do anything.

Sure it's not 100 million, but when the worst case scenario is you double your money after waiting a while, what's the point of gambling, betting in the lotto and joining that pyramid scam masquerading as an MLM?

We don't need to play against the odds to hit the jackpot. If we want to improve our lives, all we need to do is be smart and stay patient.

    “When nothing seems to help, I go look at a stonecutter hammering away at his rock, perhaps a hundred times without as much as a crack showing in it. Yet at the hundred and first blow it will split in two, and I know it was not that blow that did it, but all that had gone before.”      - Jacob Riis

“When nothing seems to help, I go look at a stonecutter hammering away at his rock, perhaps a hundred times without as much as a crack showing in it. Yet at the hundred and first blow it will split in two, and I know it was not that blow that did it, but all that had gone before.”
- Jacob Riis


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