Lesson 2:

Understanding the
Basic Financial
Concepts
Attention: GROUP 2, you are our next reporters (next week)
BUILD A STRONG FINANCIAL
FOUNDATION
Investment

Emergency Fund

Paid-Off Debts

Life Insurance
(Term / Pure)

Healthcare
(Short-Term Healthcare & Long-Term Healthcare)

Positive Cash Flow

UNDERSTANDING HOW MONEY WORKS
The Wealth Formula:
+ Money
+ Time
+/- Rate of Return
- Inflation
- Tax
= Wealth
 LIFE
BIG BIG
RESPONSIBILITIES 3M 3M
?
SAVINGS


You Work Hard
for the Money
2M 2M Retirement Years
Money Working
INCOME for You
DIE TOO SOON LIVE TOO LONG
Life Insurance Investment &
FOOD
HOUSING LongTerm HealthCare
CLOTHING
EDUCATION 1M 1M
HEALTH
DEBTS
NO NO MORE
0 0
SAVINGS RESP.
YOUNGER OLDER 65  85
 BIG BIG
RESPONSIBILITIES 3M 3M SAVINGS

2M 2M

DIE TOO SOON LIVE TOO LONG

Life Insurance Investment &
LongTerm HealthCare
1M 1M

NO NO MORE
0 0
SAVINGS RESP.

STAGE 1  STAGE 2  STAGE 3  STAGE 4 

No Savings Small Savings Bigger Savings FINANCIAL
Big Responsibilities Big Responsibilities Less Responsibilities FREEDOM 5
 The 3 Major Financial Needs

SOLUTION:
Life Insurance
(Instant Money)

SOLUTION:
Investment &
LongTerm HealthCare
(Money working for you)

3 Major Financial Needs (To complete your financial picture)

1. INVESTMENT - to generate continuing income for you when you retire
2. LIFE INSURANCE - to protect your family if you die to soon
3. HEALTHCARE - to provide you healthcare when you retire or stop working
 Basic Government Programs
Gov’t Program What it is
An insurance and retirement
program for government
GSIS employees
A savings and pension
program for private sector
SSS employees
A national savings and
housing-financing programs
A national health insurance
system. Note: PhilHealth is not
HMO, but works hand-in-hand with
HMO
Limitation
The proceeds and
benefits from GSIS and
SSS may not be enough
when you retire and
when you stop working
Limited mostly to low-
cost housing only
The benefits are limited
and can not fully cover
the healthcare claims or
expenses
BUILD A STRONG FINANCIAL
FOUNDATION
Investment

Emergency Fund

Paid-Off Debts

Life Insurance
(Term / Pure)

Healthcare
(Short-Term Healthcare & Long-Term Healthcare)

Positive Cash Flow

 BUILD A STRONG FINANCIAL
FOUNDATION
The Real Foundation in Building Wealth
1. Healthcare (Short-Term and LongTerm HealthCare)
2. Life Insurance

Life Insurance
(Term / Pure)

Healthcare
(Short-Term Healthcare & Long-Term Healthcare)