MANILA - Irrational by nature, humans should overcome their emotions and work around their flaws to be able to save and invest, an economist said.
A person's behavior plays an important role in how he or she handles money, investment banker turned author Rose Fausto told ANC's On the Money.
"We will be facing different sets of highs and low but life will be the same, the basic law of money will be the same, pay yourself first, get into the business you understand, get your money to work for you," Fausto told ANC's On the Money.
Fausto shared the following tips on saving and investing to start the New Year.
DON'T BE SWAYED BY EMOTIONS
Investing for the long term requires a calm outlook, Fausto said.
"The more you look at your portfolio, the more you panic, so there has to be a delineation, what is my short term, what’s the money for long term," Fausto said.
While digitization made spending very easy, Fausto said it's time to explore the "flip side" of it.
"We have totally taken out the pain of paying, it’s so much easier now to do these purchases. That’s the reason why I think what we need to do is to use that digital platform, how can we use it in saving and investing," she said.
Millennials who have an average of staying in companies for 1.6 years should use social media to participate in financial literacy groups to learn how to grow their money.
"Simplify, get the low-cost index ones and enjoy the returns of the market," she said.
START AT HOME
Fausto said changing a person’s behavior when it comes to investing starts at home.
"When the children see you do it and you take pride in saving and investing for the sake of the family and for the sake of old age, they will really follow suit, that is the education that works because there’s a design," she said.
With parents and schools teaching kids about money, more children are becoming more financially literate, she said.
"I see that the interest starts a lot earlier now in schools, and then by the time they start earning hopefully they will get to apply it," she said.