As the year draws to a close, many Filipinos may wonder what they did with their finances over the course of the last 12 months. Some may wonder why they’ve managed to save and spend more.
Spending more was evidenced by an uptick in spending power for the majority of the rising middle-class consumer market in the country. It tells of a trend that economists and the government have observed this 2016.
Confidence in spending
According to the University of Asia and the Pacific (UA&P) economists in a report released earlier this year, much of this spending power comes from more stable economic growth. UA&P economist Cid Terosa said the empowered middle-class stepped up spending on cars, properties and items that were once considered luxuries.
For the younger generation, spending power is invested in experiences, with most choosing to travel purely to broaden horizons and see the world before putting their effort and money into big-ticket purchases, such as homes or vehicles.
Most Filipinos now have a better understanding of how to make their finances work. Consumer confidence is at an all-time high, according to the latest Nielsen global survey of consumer confidence and spending intentions.
A factor that relates to this includes job security and optimism—which now stands at 88 percent in the second quarter of 2016. This was also noted in a consumer spending report from the Philippine Statistics Authority, which cited that the final household consumption expenditure of Filipinos from the first quarter of 2016 reached P2,457,341.00.
Better money management
The same Nielsen survey also noted that Filipino consumers remain among the world’s most ardent savers, with 65 percent of respondents stating that they would prefer to save any spare cash that they have.
Despite this, a large percentage of Filipinos know how to better handle their money, as shown by the 65 percent of people who prefer to save their spare money. They can eventually funnel it into ways to make it grow, evidenced by an economic expansion of 6.9 percent in the first half of 2016, according to an Asian Development Bank study. This expansion was brought about by an increase in investing or in the purchase of properties and vehicles.
These are indicators of the Filipinos’ ability to handle higher inflation in 2017, which is pegged to move up to an average of 2.8 percent as global prices of goods also rise in relation to domestic demand.
This means that many consumer goods will have higher prices in the coming year. With the continuous improvement of the spending and saving habits of Filipinos, hopefully, the upcoming inflation will not affect their current standard of living.
Filipinos’ spending and saving habits are varied. There’s no uniform way for all individuals to save, invest, or spend the money they earn in a year.
As a nation, the financial fast-forward of 2017 holds promise that more people will be able to improve their personal finance management more than they did in 2016.
Miggy Castañeda writes about personal finance for MoneyMax.ph, a financial comparison website aiming to help Filipinos save money through diligent comparisons of financial products.