Why financial literacy matters

Let me talk to you about financial literacy: how it promotes responsible homeownership, and why 8990 has joined with Sunlife of Canada (Philippines) Inc. to explore ways where our business can become better agents of social change, not only for the good of our buyers, but also helping create a more just, literate and inclusive Philippine Society.

8990 is successful today because 8990’s vision of providing homeownership is bigger than just the business of building houses. It’s about people.

Its about how we can provide good quality affordable homes to ordinary working class Filipinos, but it is also about making sure that they get to keep their homes by developing the right attitudes and giving them the right information.

It’s about educating the market on the nature of property as wealth creation in the context of rising real estate values over time.

That’s why financial literacy is so important to a company like 8990. It strikes at the heart of long-term homeownership and sustainable housing finance.

We realized the impact of financial literacy in our business when, in June of 2010, we required our buyers to undergo a 4-hour weekday financial literacy seminar as a pre-requisite to sales reservation.

We’ve seen how our collection efforts for the past five years stabilize at 96 percent performing accounts ratio when we are able to modify our buyer’s behavior and attitude, and create new habits that insure regular monthly amortization payments.

This major innovation makes us the only developer in the Philippines today that does financial literacy seminars to the point that we are willing to forego the sale if the buyer refuses to attend.

We’ve always believed that our target market demographic is an intelligent one.

But they need the right information and tools to make correct and rational financial decisions. That is why our financial literacy seminar has three components.

First, we teach them WHAT they pay—that is real estate with the liabilities and responsibilities in the context of Philippine laws, such as contracts and obligations, the Maceda Law and the Bouncing Checks Law.

Then, we make them realize WHY they should pay—the insight that, aside from giving their families shelter today, homeownership will also give them financial freedom in the future because the value of their homes appreciate over time, at least 100 percent every five years.

And finally, we also teach our buyers HOW they can pay. We treat our buyers to a Family Budgeting Seminar that teaches them to prioritize expenses, recognize leaks and gaps, to make room for monthly amortization payments.

I believe that when our buyers really get the message that responsible homeownership makes them legitimate landowners in the country where they are citizens of, a great change happens not only at the level of individual and family, but most significantly, we create a more stable Philippine Society.

That is the miracle of financial literacy when we are able to change people’s lives for the better, and create a stronger, more inclusive middle class.

It is a privilege for 8990 to be part of nation-building and we thank Sun Life for allowing us to continue this advocacy with them.