Maligayang Araw ng Kalayaan!
Maligayang Araw ng Kalayaan sa Kakapusan!
What is Kalayaan sa Kakapusan? Kalayaan sa Kakapusan is a Filipino term used by Francisco Colayco – financial adviser, best-selling author of personal finance books “Wealth Within your Reach – Pera Mo Palaguin Mo!”.
“Kalayaan sa Kakapusan” or “KsK” translated to English is “Financial Freedom” or “Freedom from want”. What does this mean?
To me, Financial Freedom means being able to live the life I choose to live without being limited by the amount of money I have in my pocket or bank account. It means being able to buy the kind of lifestyle I want. It means being able to decide to stop working for money, but work instead because I want to work.
Financial Freedom means having enough money to share. Bo Sanchez frames money and wealth in a good way saying: “The purpose of money is to love.” Financial Freedom means I have the capacity to give of myself and give of my wealth to help uplift the lives of other people.
KsK 10 Commandments
Francisco Colayco has 10 Commandments for Kalayaan sa Kakapusan. Below, I describe in my own words these commandments. At the bottom, you’ll find a link to Colayco’s videos on the same topic.
1 Pay Yourself First - Everytime you receive your paycheque, save 20% (or your chosen percentage) immediately. Do not leave savings for the last allocation of your paycheque. Prioritize savings.
2 Define your financial target - Determine your personal Net Worth. Net Worth is most simply computed by the sum of your assets minus the sum of your liabilities — the result is your Net Worth. Know your current Net Worth and define your goal Net Worth.
3 Stop spending on things that decline in value – Spend on assets, not liabilities. Assets are things that put money in your pocket. Liabilities take money from your pocket.
4 Protect your greatest income generating asset: Yourself – This was discussed last week when eOFW.Net featured stories on Life insurance. Get life insurance to protect your family from your untimely death. Get health insurance. Colayco also encourages that we nourish our spiritual and mental health as well.
5 Grow with the economy and beat inflation – Put your money where it will earn more than the inflation rate. That space under your bed doesn’t earn you more money – it decays with anay and by inflation. Instead, put your money in stocks, bonds or mutual funds which, if chosen carefully, could beat the rate of inflation.
6 Trust the power of compound interest – Einstein referred to compound interest as one of the greatest inventions of mankind. As early as you can, put your money in a financial investment that will earn you compound interest, and allow the power of compound interest to take over. Colayco advises, when you invest in a mutual fund, for example, place your investment and then forget about it. In due time, your money will have grown very big through compound interest.
7 Assess risks and options: The higher the return, the higher the risk – There will be many times in your financial journey where you will have options of where to put your money. Assess the risks and returns carefully.
8 Make money work for you: The power of leverage – Leverage is using other people’s money to earn more or earn faster. In other words, “utang”. But not just any utang. This refers to “good debt”. Debt that allows you to earn more than the interest you pay for the utang or loan. Good debt will earn you to pay for your debt with interest and have enough to keep as net revenue.
9 Invest and diversify – Put your money in a combination of investments. Some of them will be long-term, some will be short-term. Some will be investments in insurance, some will be investments in stocks, bonds or mutual funds. Some will be low-risk-low-returns, some will be high-risk-high-returns.
10 Use the power of one: Strength in numbers – This is Colayco’s advocacy for cooperativism. Through cooperatives, individuals come together and invest money as one for greater returns.
The Colayco Foundation website has a section discussing the KsK commandments through short video clips (2-5 mins each). Visit the 10 Commandments to KsK Videos >>. For more details on the 10 KsK Commandments, read Wealth Within Your Reach, and other books by Francisco Colayco.
May we all have the financial freedom. And with this financial freedom, may we be better able to help ourselves, our loved ones and our countrymen towards a better Philippines.
Tomorrow: A full-length video on Financial Literacy …
Mabuhay ang Pilipinas!
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