In my previous post, I shared F. Sionil Jose’s thoughts on why Filipinos are so poor.
He mentions poverty of spirit, poor sense of nationalism and loss of ethical moorings as some of the reasons. Personally, I believe that the lack of financial literacy is also one of the major cause why Pinoys are struggling with money.
As a student, all I remember ever learning about personal finance in elementary and high school were the importance of saving, thrift values and how the love of money is the root of all evil.
I believe that these are not enough and other financial habits such as expense tracking, wise spending and the concept of budget planning should also be taught to children as early as possible. As for me, if it weren’t for my parents and some personal initiative to improve my finances, I wouldn’t have made effort to study and learn about these things.
In line with this, I tried to do a little research on the state of financial literacy in the Philippines. Interestingly, I found several studies conducted by financial agencies and business institutions. Here are some of the facts I’ve gathered from the reports:
Overseas Filipino Workers and Their Families
- 32% of Filipino households have family members abroad
- Among these OFW-supported families, 48.6% are investing
- 31.4% of these households earmarked money for bank savings
This is essentially good news as the numbers have grown from the past year. However, what concerns me most with these results is how the money is actually being invested. It’s been reported that most of these families have bought assets which later turned out to be liabilities.
Furthermore, who could forget the billions of pesos that was scammed from Filipinos by various pyramiding schemes such as Multitel. If the victims only had due diligence to check the legalities of these companies, then they could have prevented themselves from being conned into these programs.
Moreover, in an exclusive interview, one OFW shared that Filipinos abroad often burn money in buying clothes, bags, laptops and other techie gadgets that they never get to use. When asked if her fellow Pinoy crewmates have the habit of saving money, she clearly answered that they don’t, and this is the reason why they come back year after year.
I’ve seen this personally from a friend who came back from working in Japan two years ago. She showered her family with gifts and even bought them a new house. She invested in several real estates and started a business with her brother. She thought that all would be well and good until early this year when she realized that her savings are slowly being depleted by the indolence and lavishness of her family.
Her investments are not earning high enough to sustain their expenses and her brother, lacking the entrepreneurial mindset, is mismanaging the business. She is now busy preparing to go back to Japan by the end of the year.
The Middle Class Filipino
- 80% of working, middle class Filipinos see a bleak retirement and more than half expect to be supported by their children in their old age
- Only 10% of Filipinos are consciously saving up for retirement
- Among the middle class, 36% save regularly every month while 51% only “save when they can”
- 90% attempt to follow a budget, but only 33% stick to it
- 40% pay their credit card balances in full monthly, while 22% pay only the minimum amount due in their credit card statements
- When asked about investing, 43% think they know exactly what to do if they had money to invest, 53% have a “good idea” where to invest, while 4% have no idea how to invest
- 84% of the working, middle class have no formal financial plan
Although these reports may be disappointing, there is actually some good news. One financial agency reported that in a population survey, they’ve discovered that more than half of Filipinos believe on the importance of saving.
However, the real problem lies in having the discipline to implement their financial goals. Many attribute such deficiencies to the lack of resources and financial know-how.
Indeed, I’ve seen much of my corporate friends who try their best to improve their finances but later on fail to become consistent and persistent with their efforts.
There is a need for change if we want the Philippines to become a first world country someday. I believe that it should begin within us and it should begin now.
How about you, where do you belong in these statistics? How financially literate are you?
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Oh by the way…
Dumlao, Doris. “More OFW families save, invest money sent to them”. 15 June, 2008.
Duplito, Salve. “Are OFW-supported families starting to save and invest?“. 17 June, 2008
– – -. “8 out of 10 Filipinos worry about bleak retirement“. 17 January, 2008
Quebal, Articer. “Expanding Financing Literacy To The Barangays And Schools”. 2004
Photo courtesy of aquino.paolo