 The Philippine Statistics Authority, or the PSA, estimates that in 2017 the country has 10,180,000 youth aged 15 to 19. That's roughly 10% of our current population. That's 10 million people who are actively contributing to the Philippine economy. In 2012, the average weekly spending of Filipino teens was estimated at 327 million. That translated to a total annual value of 268.8 billion that they contribute to the Philippine economy. And what do these Filipino teens buy? Research showed that top items that teens spend on are snack foods, 99%, beverages, 95%, transportation, 67%, cell phones and gadgets, 59%, personal care products, 55%, clothing and accessories, 24%, and fast food, 35%. Data shows that teens spend time and money to go out with friends and play computer games at the internet cafes. They also spend for cigarettes and alcohol. YOLO, or You Only Live Once, has been shown to be a philosophy common to many Filipinos, including our teens. The saying, great power comes with great responsibility is true, also for financial matters. Increased spending power means increased responsibility to make the right financial decisions and managing budgets, even at young ages. Greetings once again, ladies and gentlemen. Welcome to Financial Sense, where today we discuss teens and money. We'll say teens, teen-agers. I am Alfredo Pascual with my co-host, UP Professor Elena Pernia. As statistics show, Filipino teens will considerable economic power because they comprise billion pesos of market. This finding alone justifies the importance of financial literacy for them. Actually, teens don't need much or not, they don't need to have much money to begin learning how to manage it. They don't even have to be good in math. What is essential for teens is to understand, one, how money or how to earn income honestly, two, how to spend money wisely, three, how to save safely and regularly, and four, how to share their money, their wealth, generously. My greetings to our viewers and of course to you, friend. Today's topic is close to my heart because I can relate with the youthfulness of our discussion since I consider myself always young at heart. But more seriously though, I believe that we have to empower our teen-agers to begin managing their money in a more adult or a more responsible way. These days, teen-agers handle more cash than their parents and grandparents before them. Our teens need to know the ABCs of money handling because the financial challenges that they face as they grow up will become even more complex. I agree with you, Nanny, on these worldwide trends indicate that the spending power of teen-agers is unprecedented. Teenagers today are handling more cash than any generation before them. In fact, their purchasing power has been and will continue to increase year on year. However, research results about how teens' handled money are disturbing. I've read that parental guidance in financial matters has been rather poor, which probably reflects their own low level of financial literacy. A worldwide survey has placed the Philippines as one of the 30 least financially literate countries in the world. Only 25% of Filipino adults are aware of the basics of managing money. This is definitely not a good sign. I guess you are very correct, Fred. The Philippines is one of the fastest-growing economies in the region today. This is growing at roughly 7%. This growth will give Filipinos the chance to have even more financial power than ever before. But with our rather low financial literacy levels, all this growth might be wasted if large sections of our population do not understand how money works and what the consequences of having bad money habits. What we need is good financial education. Unfortunately, an Asian Development Bank study showed that the Philippines is still in the process of finalizing its national strategy for financial education. Meanwhile, India, Indonesia, and Japan have already implemented their financial programs. Despite this, I think there is a positive scenario for financial literacy in basic education in our country. The Department of Education, or DEPED, for instance, has announced that Filipino students will soon get an early start in financial literacy. In fact, DEPED is hopeful that senior high school, under the K-12 program, the students will be given courses to learn financial management and investment, and by the time they graduate, they would have skills in these areas. I read that same press release from the DEPED, and I see hope in DEPED's efforts in integrating financial education and consumer protection in the K-12 curriculum. Not only is DEPED's financial literacy efforts directed at students, there's also a training program on financial literacy that has been designed specifically for teachers so that they learn on their own financial management knowledge and skills. Moreover, partnerships have been established with financial institutions like banks to help bank the unbanked in schools in urban and rural areas. All these initiatives are all very good, but you know what they say? The young, especially the teens, are very carefree. How many of them even think of saving regularly or setting aside some amount of money for future use? Let's say for some potential business or a financial emergency. Let's speak first with a development psychology seated beside me to get some insights on how concepts get to be learned and understood by adolescents, by teens. We have with us Dr. Ana Tuazon from the Department of Psychology of the College of Social Sciences and Philosophy of UP Dileman. Tuazon, welcome to the show, this episode of Financial Sense. Thank you for accepting our invitation. Thank you for inviting me. As a child clinical psychologist, I encounter many teenagers and their families. I think what is related to the financial decision making that they do and the management, we have a concept for teenagers or adolescents called invincibility fable, which is part of their personal fable. This is the concept where they tend to take more risks, actually, because they think that there is less danger for them, so they tend to invest in more risky ventures. They tend to spend their money because they always think that nothing bad will happen in the future, and they think that they can earn this money back. They have an overestimation of their earning potential down the road and an underestimation of unexpected challenges from a cognitive standpoint. Now, if I can share a little bit about from the biological standpoint as well, because for adolescents, actually, I don't know if you're aware of this, but the executive functioning area of our brain, which is here in the prefrontal lobe, is the last to be developed, and it develops all the way until adulthood. So, our brains actually develop even as we're born, as we're growing up, and this prefrontal cortex right here is the last one to develop, and for teenagers, some of them are actually biologically still developing that part, and why do I keep saying executive functioning? Because what do executives do in a company? Problem solve, manage, make judgments, make decisions, plan, and organize. And I can imagine, even though I'm not a financial expert, that these are very important skills necessary in managing finances. So what you're saying, Dr. Twasson, is that these decision-making in the prefrontal lobe, it comes with time? Yes, definitely. Of course, everybody's brains develop at their individual pace. Some definitely mature earlier than others, but what we need, and what we ask for parents and adults, and maybe teachers as well, is how to support that developing prefrontal cortex. So they really cannot do this unguided and unsupported. I see. I think that's where the program like ours could help, but more so the guidance from parents over their teenage children. Well, we have teenage guests here, Neni, would you wish to introduce them? We have two teens here, one, Elena, who represents our younger end of the teen years, and we have Myrtle here, who represents the slightly higher teen years, but they're still both teens. And if we use the vocabulary of Dr. Twasson, still developing the prefrontal lobes. So Elena, can you tell us about yourself and maybe how developed these decision-making functions are in you? My name is Elena Hongwika, and I can say it's developed, but not much in terms of if I was an adult, I could compare that I'm not really that much. I was kidding. What I do mean is to what extent have you as a teen thought about financial matters? It surrounds my allowance. Oh, I see. Yes. My allowance is actually every Monday when I'm school, it's for only food. So when I go to school for a weekly, it's 100 a day, so I get 500 a week. I usually save 100, and then that goes to my wallet, so that when I go to outings with my friends, it gets spent that way. So we have Elena here, whose income is about 500 a week. So she has a concept of saving. Yes. But very short term. Yes. It goes to her wallet. And then it goes to the... The whole amount of 500 given to you for a week is all spent at the end of the week. Have you ever thought of saving for the long term? No. It didn't really come to mind. Well, at 500 a week, and you go to school. So maybe the income is too small to go long term, or I may be wrong, but let me ask Myrtle here, who has, I think, a bigger income? Well, hi. I'm Myrtle Serosa. I'm 22 years old, and I'm known for being the Pinoy Big Brother team addition for Big Winners. So I would say that I have a different situation because I started earning as early as I was just 13 years old. So when I was 13, my parents, they wouldn't give me money at all. They just won't give me money to buy toys. And during that time, I really wanted to get into cosplay, which is very expensive. And they told me, if you want to cosplay and if you want to do that modeling stuff that you really want to do, then you have to earn your own money so that you can spend your own money. And that's what actually forced me to start earning money at such a young age because if I wanted to pursue my passion, I had to earn money. So I guess at a very young age, I could say that I did develop such a financial sense so that I could pursue my passion right now. I'd like to ask you, what options are there for teenagers to earn? Well, at that time, social media was already very prominent. So I got into Facebook, actually that was like Friendster and then Facebook. So it was the start of Facebook. And during that time, I started my own Facebook page and I started selling some of my items and costumes. And it was during the time that online selling wasn't exactly popular yet. And I was so shocked that when I was at that age, I was earning so much from it. Like at 14, I was already earning as much as 5,000 to buy costumes. And then later on, like when I continued that passion, even before Pinoy Big Brother, me and my friend Nadine Luster, who is now like a big artista, we were earning 15, 18,000 at like 17,000. So what were you selling actually? Costumes, physical costumes, not just images of costumes. Yes, we were selling costumes. So it was pre-used costumes. So we would sell our clothes and other items. Okay, did you think of other alternatives for earning money? During that time, I was also doing other businesses aside from that. But I can't disclose it now. Because it's with my family and I'm helping them out with the business. So yeah, it was after Pinoy Big Brother that I was earning so much money. So I was 17 when I won Pinoy Big Brother and I earned so much money. And I could honestly say that earning so much money, I also spent so much money. And it was only when I hit my lowest point. Because when I hit my lowest point, I spent so much. That's when I realized that I needed to invest. I needed to start up new businesses. I needed to learn more about money. Well, whether you're earning a lot like Myrtle here or you are relying on regular allowance as income, you still have to learn more about savings and where it goes into. Is that correct? Yes. Okay, so maybe we can ask again our psychologist here about more cognition skills that teens need to develop. Yeah, actually what Myrtle shared was very interesting to me. Because even though we think of risk taking, at least from a more academic, psychological side, from a parent side as a downside, actually it could be a good thing, right? Because she was thinking outside of the box. She was very creative in terms of how to make supplemental income. So the risk taking actually can be a good and a bad thing. Now it just has to be balanced by being able to consider different alternatives or different perspectives. How to think of, for example, what they would probably need to do is force themselves, because this will not come natural to them, about what the worst case scenario is. What if all this money income stops? What will I need to do? These are kinds of scenarios that they would not naturally or as easily think of as they're getting excited by all these new opportunities. So a sophistication, as it were, in the way that they make decisions. Perhaps they've talked to us about their income. They've also talked to us about their spending. What about the other aspect? Sharing, sharing your wealth. I do that, but in terms of buying food for my friends. Yes, that's definitely sharing. So how often do you do this and do you reckon that against some savings that you have? No, it's separate from my savings, actually. The part that I share with them, the money that I used to buy for food, I share, but then not much because my savings actually is savings and it goes when I go out. About Myrtle. I guess I'm really lucky because my parents really taught me how to put aside money. So my parents taught me the five envelope system. I think it was by Bo Sanchez, where in you put aside a certain percent for your expenses and then another envelope for your retirement, another envelope for your tithe to share to other people, another envelope for emergency. So I, and the last one is support fund and the last one is the support fund because I also have my, I'm also giving money to my driver and to my assistant. So my parents would always tell me that you always have to put aside money. When you get a certain amount of money, you have to make sure that you separate it to different envelopes and make sure that you have, make sure that you put it at the right envelope. So to share, yeah, it's very important for me to share because of all the things that I realized, it's when you share, that's when it actually comes back to you. So right now I've been helping quite a lot of charities then and I've been helping them ever since I was younger. Yeah. Saving is the most difficult part because there's always the pressure to spend whatever you have, you know, especially when you're young. Since you're under the care of your parents, you think there's no reason to plan for the future. But starting, you know, the savings habit is best done when you're very young because of the power of what we call the compounding, earning power of money. I don't know whether your parents have explained this to you already, where money earns interest and the interest that you earn will also earn interest and that earning power compounds itself, you know, so that at some point, the money itself will be generating more money for you. Okay, that's being a capitalist where your own money will earn without you putting in your labor. And the sooner you start it, you know, the better it is because the compounding effect will be much more. I don't want to talk about the mathematics of it in the show, but there is that very important element, you know, the time element where the compounding would happen. For many of us, the realization would come late, so there's less time for the money to earn for itself. So for young people like you, the teen, in the teen years, you know, you should start saving. And how do you save? Do you save only after, you know, what's left from what you've spent? Or you save first a certain percentage of what you have and you only spend what's left? I mean, these are two ways of managing your money, you know, you have your income, you first spend on what you need and what ever is left, that's what you save or you decide on saving a portion of your income and you only spend what is left. I save when the money is there, I actually already put it aside because my parents- Yeah, because you have the envelope. Yes, yes, my parents keep telling me to invest in the stock market. So when I was just 18, they already taught me how to buy stocks. So it was a very interesting way to learn about it. And it is only today that I actually learned that my money, like, the interest is up to 20%. And I was like, wow, this is the money I used before, I thought I didn't have it, instead I put it in the bank, I put it in the stocks. And now that I'm looking at it, it's like, wow, this is it. So I'm really grateful that I learned about it. I wish that I could also help other teenagers to also learn about it. That's a purpose of our program here, you know. You share your experience, so other teens and even parents, you know, will pick up these lessons and implement these in their families. Because most of the time, most of the people of my age, we would just spend all the money that we have thinking that, okay, you only live once, so you're gonna go out and enjoy. Yes, you're gonna go out, you're gonna buy the latest clothes, you're gonna buy the latest gadgets, you're gonna, you know, most of the time, most of the people of my age like to really show off what they have. So it made me realize that sometimes you don't need to have the most latest items in order to be successful. Very interesting, Myrtle. But now let's hear from Alayna, the more typical of our teenager here. How do you do, what do you do with your savings? I actually do the latter where I separate the savings and then what's left is what I spend. The separated savings is actually, I plan a month before because my meetings with my friends at malls is actually a month to month basis. So the money there gets spent on our outings, which is usually eating out, watching a movie, and then buying stuff. Oh, okay. So is setting aside the same as saving? Well, there are many ways of talking about savings. One way to look at savings is being able to live within the money that you get on a weekly basis. Have you found yourself in situations where you have to run back to your parents to cover what you have overspent? No, not really because the savings that I have, I like, I spend the money on it. So you have already one big element in the business of savings. That means you can live within your means, okay? So if you are in a situation where you deduct something from what you have for savings, what is left can take care of your other expenses. So you already have that very important characteristic of discipline in your spending, right? What about growing the savings? Have you thought about other sources of income? For example, small businesses that you can venture into to grow your savings money? I actually have, but I really don't know how. So what she needs, what Alayna needs, is more instruction, more exposure to potential money-growing projects. Have you ever worked during summer? No, summer is actually family time because most of it is during summer. Because I know some teens who would work, for example, in some retail shops during summer, summer break from school. Or you can do some student assistantships. Yes. Or produce cookies to send to school. My friend actually does that. I've seen that done by the same team. They bake stuff and then they go out and advertise it to people and then they buy. Okay, and early entrepreneurship. They're two sides to money, earning it and saving. But I wonder how they do the costings. I don't know whether they're making profit or not. Yes, that's right. Because everything, probably all the ingredients are free from my mis-kitchen. That's right. I have a friend, her name's Angel, and she actually, it's her savings where she got the money for the ingredients. And it's actually her own brand. She buys all the stuff there. And the thing is that I admire about her is that she, in our TLE, we... We are TLE. It's like home economics. We're taught the profit. I forgot what it's called. But it's like when you bake something and then the profit cost thing there. She does that. So when you buy her cookies, which are amazing, it's not how do you... It's not expensive. Okay, yeah. So she was able to sell a good product at an affordable price. But yet, earned money. Yes. She has income, actually. So that's senior high school for you. Senior high school has been kind of effective in teaching them some kind of financial literacy. Yeah. Because when you're trying to earn money from a business like that, making a product and selling the product, earning the profit, you can increase the profit by managing your costs well. So these are all the different aspects. You increase revenue by increasing the price but up to a limit because you might not have buyers if your price is too high and then you manage your cost and to increase the price or to its limit and manage the cost, you optimize your profit. And it's the profit where you can save. Let me ask Myrtle now about handling credit cards. When you were in your teens, you were already earning. Did you, at that time, and how about now, do you use credit cards? Yes, I actually do. I just turned 18 when I visited the bank and then the bank was like, here you get a credit card because now you're legal. Ah, you're pretty legal. Yeah, they actually gave me a credit card. And the first time I used it, I was so excited that I just bought so much stuff. Oh, okay. And during that time, no one really tells you about how to read a credit card statement. So the first time I read it, I'm like, what is this? What is this? There's like a due date and there's like interest level. And during that time, I was just very confused what it was. So there were many times when I was younger that I completely forgot to pay for them and I got scolded. And they had to pay what? Interest. Yes, and I had to pay interest. And after that, after you get the burn from having to pay the interest in a huge amount. Then you learn your lesson. I learned my lesson. And I'm like, I wish sometimes people or teachers at school would actually teach these things so that you would actually learn them because suddenly you realize that sometimes it's actually bad to depend on credit cards. Like instead, maybe you could just like earn within your, within what amount that you can actually spend. So maybe realize that I think I'm starting to consider that I should just spend the money that actually have. The problem with credit card based on what I have observed, is that people have this wrong notion that it's a source of money. It's not because you have to repay. And if you don't pay on time, you pay interest. So you actually spend more than what you would have spent if you save the money and just spend the money for whatever you want to buy. Well, credit card, the use of credit card could be a trap. I've seen many people being caught in the trap of accumulating unpaid balances and paying interest on the unpaid balances. Not necessarily from the young, even from the adult population. There's a lot of that problem. That's why part of the financial literacy programs now is to inform people about all these good things and bad things about credit card. Just remember that credit card should be used only for convenience. So you don't need to bring cash. Let me ask you, you are the financial expert. Between a credit card and a debit card, should we have our teens have either? Debit card is a better way to help the kids learn how to manage their money because they can only spend what's already there in the bank, the money already in the bank. Whereas credit card is, they're spending something that they don't have yet. Okay? So debit card, if your parents will agree to give you that facility, in other words, get your bail on your weekly allowance through a bank account where you have a debit card, I don't know whether it's possible. I think there is an age requirement for... How old are you, Alayna? I'm 15. 15, I think that's pretty old. I think 18 is the... I don't know, what's the legal age? They already have like, they actually have like a bank account for kids now. There's also a bank account for teens. Maybe, yeah, with the parents or signers, yes. Well, that's the best way to teach financial literacy, to actually give the kid the actual experience of making use of these financial instruments and understanding the pitfalls of using credit card or debit card. There's really a lot of pros and cons to it and I really think that financial guidance is very important. So you look to your parents, you said, for this information on financial matters and you're pretty happy with their advice. Yes, my mom is an accountant and originally my course in UP, the course that I got into was accountancy and she was already forcing me to get into accountancy and I was like, oh no, I want to get into Mascom. It's not that I want to avoid math, but it was just that I enjoy speaking more rather than seeing numbers. Well, maybe in Mascom we'll have a course on communicating financial literacy. We have, in fact, a project where we have funded professors to develop a way of communicating science. That's right, yes, yeah. So we'll do the same thing for communicating. For communicating finance. That's right, so that the financial burn, when you make mistakes, will be minimized among our young. Alayna, have we empowered you right now to ask your parents to negotiate with your parents financially? But she's very young, you're only 15. Prey, I can see that she has, you have so much to learn and you have so much ahead of you, so. What do you think are the best ways to inform your co-15 year olds, your co-high school students about matters like this, you know, income increasing your income? What do you think your school should do to teach better financial literacy? I don't think telling them would be the best way because actually most of the teenagers don't really listen, but probably experiencing them, telling them your experiences about it, they might actually learn from that rather than just telling them about it, so, yeah. My grand-nephews go to a school where even in preschool, they have this financial programs. They're asked to make something, to sell it, and then to do a bit of a computation about how much they take in. In your school, do you do that? Yeah, we do that. It was one of the projects, I think, for grade nine and 10 in our home economics that we would have to, and clubs, actually, that we would have to make something and then sell it and then we count the income and it actually goes to the school, but then it's the thought, it's the experience there. Well, as we have said earlier, there is a program for financial education that's going to be integrated in high school, and that will be very helpful. But as we have heard from Alayna, it's not enough to just teach by lecturing, they have to experience. Like I suggested, you're having, or you're being given the opportunity to experience using credit card in a well-guided way by your parents is one way. Yeah, and if I understood correctly from Dr. Twasson here, it's experience that really leads to greater learning. Maybe it's specialists like Dr. Twasson, who should coordinate with education specialists and finance experts to develop these modules for not just senior high, but maybe also for a college level. I think what's necessary are developing age-appropriate strategies that are experiential in nature. Because as we have heard our two teenage experts here, it is experience that is the best teacher. Well, what psychology tells us on how best teenagers would learn, that you agree that experience is a better teacher than just being lectured? I really agree, and I'm smiling all the way from here because yes, definitely teenagers do not like being taught what to do. I don't think we can stress that enough. And in fact, they need to experience it, but in a safe environment where they control conditions. Exactly, and actually, again, I know I keep talking about the brain. This is apart from infancy. Adolescence is the time where neural growth, there's a burst of neural growth right now. So that's why teenagers are trying new things all the time, right? They're trying new things. They're at their height of their creativity because they're really willing to try. And something that you said earlier, the earlier they can instill this habit of saving, of being financially literate, the better their chances and their adulthood to do this without even thinking about it. That's right, become second nature. Yeah, and another good way I would think of learning is learning by the example of others, isn't it? Observing how your parents go about these things you're talking about. And definitely, Mirtel has the advantage of having a mother who's an accountant. And she can really observe how the mother is managing, you know, the numbers involved in managing money. I think that's very important that they're not really just talking of teens learning the skills needed to manage money, but also parents learning these things, you know, having the financial literacy so they can play good role models for the children. That's another, would you say, Dr. Croissant way of learning. Yes. Seeing how others go about things. Yes, definitely, that will accelerate their learning when they see the consequences and or rewards that other people get for practicing, you know, good financial sense. That's right. Yeah, learning from others' mistakes rather than from your own mistakes is much better, isn't it? But sometimes teens, you know, they won't even listen to that kind of approach until they have experienced themselves, you know, the whatever it is, you know, good or bad. Well, having role models among our celebrities as well, I think is a pretty good strategy. We have a good role model here from a celebrity. That's right, yes, who can talk from experience, you know, the pitfalls as well as the successes that she's had. I like the five envelope approach. And it really works, it really works. But I hope the money doesn't stay the envelope, particularly what you say, because that money has to earn. Yeah, uh-huh. Yeah, in the envelope, it's zero interest. So with our economy booming, you know, these experiences that these young kids have are very effective, I suppose, for improving upon what others among their generation should know. So keep on learning, I suppose, and maybe a few last words, first from our teen experts, and lastly, perhaps, from our expert in psychology. Any advice that you'd want to give your co-teens? I would say that starting from now, you should actually start learning how to save because it helps in the future. My advice to teens, my ages, always remember that money is not the most important thing in the world, but it does affect so many things like your daily life, your family, and your friends. So despite that, always remember that you should actually handle your money very, very well and always think ahead, because sometimes if you only think of the now, you forget what would, you forget that there's the future and that you should also prepare for it. So always remember to put aside money and also save for your future and save for your retirement, that's what I always tell people. And always just, you know, just you will know, but put the limit to it. So the very young think about when they're retiring already. Dr. Twasson? Yeah, so my advice is actually for the parents of teenagers, right? So for the parents, provide them with opportunities to experience and practice, you know, making financial decisions even if it's for their allowance or for small startup business ventures in a controlled, supported environment. That way they make lesser mistakes and you have to guide them much less when they're adults. That's true. My kids, you know, before I used to give them their allowance for school, I asked them to prepare a budget. Okay. Anyway, friends, I hope this episode today has given us some food for thought, particularly for the teenagers that will watch this program and the parents who will also be, you know, going over what we have discussed today. And I'd like to thank our guests for sharing with us. Their experiences and their thoughts on the matter of, on many matters related to teens.