The National Strategy for Financial Inclusion released by the Bangko Sentral ng Pilipinas (BSP) stated that while the institution strives to broaden the reach of financial services such as savings, payments, credits and other services to Filipino households all over the country, financial literacy should complement this initiative. The objective is to build a regionally responsive and development-oriented Philippines as we move to a better financial system.
Financial education and advocacy programs of the public and private sectors have been identified as key areas in building an improved financial system in the Philippines. Along with these are the policy, regulations and measurement of data, which can be used to strategically execute programs for financial inclusion in the country. The question thus, emerges: what is the state of financial literacy in the Philippines today?
Guilty pleasure of spending
Most economists find the Philippines interesting since its economic growth is heavily influenced by domestic consumption and not by exports. Between 2011 and 2014, the domestic consumption growth rate has been at 4.07 percent, which can still increase given that inflation for 2016 is projected to be at 2 percent, according to Dr. Alvin Ang, an economics expert.
One of the factors affecting this huge contribution of domestic consumption over recent years is the fact that from the 2006 inflation rate of 7.5 percent, it has gone down to a projection of a 2 percent increase for 2016. If no changes in lifestyle occur in a person’s life within the year, chances are there may not be a big increase in his everyday budget; thus, he will have more disposable income since employee wages typically increase every 2-3 years upon regularization. There have also been a lot of choices in terms of boosting income through various streams such as engaging in side businesses and investment options, such as mutual funds and stocks, which can start from as low as P5,000.00.
The abovementioned sounds like the ideal scenario to get Filipinos to save and grow their money while still living within their means. According to the World Bank Survey conducted in 2014, however, an estimated 20 million Filipinos reported having saved money, but when cross-checked, only 10 million of them had bank accounts. This may be mean some people have liquid assets kept somewhere in their homes and not invested in any financial products. It could also mean that some respondents may have been saving for big-ticket purchases to be made in the next two to three years, and not for emergency or retirement purposes.
While these findings indicate that Filipinos are trying to save money for the rainy days, they do not necessarily mean that everyday expenses are managed adequately. The 23 million Filipino respondents of the survey declared that they have experienced running out of money for food and other necessities, and they included individuals earning more than P50,000 monthly.
Contrary to common belief, higher income doesn’t equate to a better financial standing, especially if one’s money is not well distributed among various financial products but spent aimlessly on non-necessities. This is where financial literacy can be useful in helping a person apply effective personal financial management.
Upsurge in online financial education
While government agencies such as the BSP, the Securities and Exchange Commission, the National Credit Council, the Insurance Commission, and the National Anti-Poverty Commission try to work together to raise financial literacy in the country, many private groups have utilized the power of the worldwide web to raise public awareness on financial literacy.
Internet penetration of the Philippine population stands at about 3.1 billion out of 7.2 billion (43 percent), according to the global digital agency We Are Social, which includes both mobile and broadband connections. If a majority of this segment goes beyond checking the social media and deeper into learning about personal finance, this could contribute to a significant increase in financial literacy in the country.
The Philippine Stock Exchange holds free “webinars” about basic investing principles, where individuals who may be afraid of starting to invest will hear insights from in-house experts about the benefits of having passive income streams. Many Facebook groups such as The Global Filipino Investors, Filipino Financial Freedom Forum and Angat Pilipinas Coalition, with group members numbering from 20,000 to 75,000 openly discuss personal finance matters with their peers, as well as with personal finance advocates such as Fitz Villafuerte, Marvin Germo and Efren Cruz.
Personal finance blogs authored by registered financial planners and personal finance advocates have also entered the radar of people looking into learning about personal finance. One can even follow the only public Viber chat spearheaded by Randell Tiongson, which has 7,594 followers as of the third week of February. Followers get updates on financial news and see real-time conversations of popular financial advocates such as Salve Duplito and Edric Mendoza right at their fingertips.
The Manila Times has also been helping with this endeavor through spreading news through financial literacy both from its printed edition and its online portal. With its new content partnership with MoneyMax.ph, it aims to strengthen the desire of its readers to learn more about personal finance and apply the financial tips that they pick up from reading to their daily money habits.
Time to spread financial literacy
With increased access to financial education both online and offline, combined with what is now a unified national strategy for financial inclusion, we can get more Filipinos to contribute further to the nation’s economic growth with proper financial education. Ultimately, that could lead them to experience such economic growth in their personal lives through the application of the financial lessons that they pick up in the process.
Kristel Silang is the Content Manager of MoneyMax.ph. She has contributed articles to the publications of PageJump Editorial and Vibal Publishing. MoneyMax.ph is a financial comparison website aiming to help Filipinos save money through diligent comparisons of financial products.