Despite the endless number of personal finance articles online (heck, we have quite a few of them here on the iRemit blog), money remains a touchy subject, especially among Filipinos. It’s simply not something we talk about in public, or even with the ones closest to us.
However, knowing how your financial status compares to the rest of the country can give you a better idea as to whether you’re earning enough, or if you seriously need to step up your game in order to survive what the future might bring.
You certainly won’t find out by asking the average person about their finances, so here’s how we go about it. First, you need to calculate your net worth.
Computing Your Net Worth
The formula’s quite simple: your net worth is the difference between your total assets and your total liabilities.’
To calculate your total assets, add up all the cash you have (on hand and in the bank), the current market value of any valuables you might own (jewelry, property, cars, perhaps even a vintage comic book collection that could fetch a high price, etc.), the current market value of investments like stocks, bonds, and time deposits, and any receivables, such as payments owed to you by clients or friends.
To calculate your total liabilities, add up any pending credit card debts, outstanding loans (e.g., car, house, etc.), insurance debts and similar payments, and debts owed to friends or suppliers.
You can then deduct the value of your total liabilities from the value of your total assets to arrive at your net worth.
Comparing Your Net Worth to the Average Filipino’s Net Worth
Assuming (and hoping) that we all got a positive figure in the previous equation, let’s see how we stack up compared to the national average.
According to the Credit Suisse’s 2016 Global Wealth Report, the average Filipino adult has an average worth of USD9,878. If we put the exchange rate at USD1= PHP50, that gives us PHP493,900.
Provided that your liabilities don’t exceed your assets, owning a car or a property will already make you richer than the average Filipino by default.
Where to Go From Here?
What does this added knowledge give you? (Apart from an unshakeable feeling of despair or smugness, depending on what figure you got.) The way forward, for starters.
If your net worth falls short of the national average or if you find yourself staring at a deficit, this means that you need to redouble your efforts at managing your finances.
Take a long hard look at your assets and liabilities and figure out how to favorably increase the difference between them. Do you need to look into additional income sources, such as a part-time job or business? Are there expenses that you can do without? Credit card bills that you need to pay off bit by bit until you’ve got zero debt?
Now, what if your net worth is higher than the average Filipino’s? Provided that you’ve already got a good financial strategy in place, keep up the good work.
You may also want to use your skills and knowledge to teach others how to manage their finances as well. Why? First, teaching elevates your understanding because this activity constantly refreshes your memory.
Secondly, teaching others opens you up to different ideas; fielding questions from various individuals could lead you down a path you wouldn’t have otherwise considered. Thirdly, well, it doesn’t hurt to give back and having more people on the positive side of the net worth spectrum is better for the economy.