How Bank Accounts Help Keep The Economy Spinning

I still thought about the argument I had with some crazy 4Ps obsessed old man who insisted in the lie that 4Ps creates jobs when it doesn't. This is how he likes to brag about 4Ps as being "effective" aside from the non-existent 3x return and 5.88 multiplier effect -- he says that in order to increase jobs then you must increase spending. While spending is indeed necessary but remember not all spending creates jobs. Do you create jobs by spending your money on nonsense like karaoke, illegal drugs, getting drunk and the like? Unfortunately, that's where a lot of the money given during 4Ps goes and I guess he doesn't see it. Now it's time to look at another aspect of economics -- the importance of having bank accounts.

It's not just about increasing spending (which is necessary at times) but also increasing BANK SAVINGS. You may ask how can bank accounts help keep the economy spinning? Do you even know why we need banks? You can think about the whole idea of saving your money in the house, in a safe, in a vault and the truth is money appreciates and depreciates overtime. Also, what's so sad was that I remembered I actually wrote something about how at least 69% of Filipinos don't own a bank account last 2015. That should be an alarming figure indeed.

Why do you get interest for every kind of investment you do in a bank whether it's saving accounts for starters and bigger investments in the future? It's because banks loan businesses their money. In order to make a business, you need some extra money and a good bank doesn't just let anyone borrow money. They have to do proper scrutiny or background check with who borrows their money. Some banks fail because not only do they overspend but they fail to do background check. When businesses are financed then they have money that must be spent on necessary expenditures such as labor fees, Research and Development funds, utility fees, supplier fees, service provider fees and other related expenses in business development. An increase of savings in the bank is just one step then investing in other transactions such as bonds and stocks to finance corporate expenditure.

So how can Filipinos start with bank investing? They can start with savings accounts but make sure that they maintain the PHP 10,000.00 or above minimum. They need to start getting serious about abdicating the "Filipino trademark" of overspending because abandoning bad financial habits doesn't make one any less or more Filipino. One should consider thinking stuff like, "Do I have money to pay for extra electricity or gasoline?" before making decisions to buy an airconditioner or a car. This also means foregoing lavish feasts and start having simple celebrations. This means starting to learn basic budgeting habits and start saving your money in the bank and focusing more on your needs than your wants. That way, the more you focus on your needs then the more you can buy what you want in the long run - unlike when you keep focusing on your wants then you can no longer buy more of what you want because you no longer have money. 

If they manage to make enough money then it could be time to enter into basic investments. Don't enter money into stocks unless it's excess money. Instead, start putting some money into the time deposits, unit investment trust funds or treasury bills to name a few. There's the money market. These investments can help lock away money that you may be tempted to overspend on. At the same time, they are helping corporate expenditure such as dividends with stockholders. It's all part of keeping the game running one way or another. 

Not to mention, becoming more open to Foreign Direct Investors themselves would also help increase the number of money in the banks. Not only are they required to pay their income taxes but they will also help Philippine banks. FDIs would want to have their money in the Philippine bank where it will take less hassle for them to withdraw and deposit than to pass through their home country's banks. That means there will be more money to loan to businesses and more businesses that will loan money from the banks. It may also slowly increase returns for those who are investing in the banks at the same time. 

So what are you waiting for? It's time to start learning good banking. Look for a good, reputable bank like Banco De Oro, Chinabank, Metrobank, Bank of the Philippine Islands and be careful of banks that offer packages that are too good to be true.