The Consumer Finance Survey of 2012 by BSP showed disturbing statistics regarding the financial acumen of Filipinos. Here are some of the results: 51.5% of the Filipinos spent as much as their income, 43.8% spent more than their income and only 4.7% spent less than their income; average emergency fund is at P200.00; and less than 1% of the population invests in stocks, bonds, mutual funds, unit investment trust funds, and government securities.
Studies have shown that financial literacy levels are lowest in developing countries. ( Cole, Sampson & Zia, 2009). In the Philippines, it is a debate whether it is the lack of financial education or the extreme poverty that is all around us which is the cause of failure to advance the Filipinos to financial security and eventually financial independence.
What is Financial Education? The Organization for Economic Co-operation & Development defined it as a process by which financial consumers/investors improve their understanding of financial products & concepts and, through information, instruction, and/or objective advice, develop the skills & confidence to become more aware of financial risks and opportunities to make informed choices, to know where to go for help, and to take other effective actions to improve their financial well-being.
Financial Security and even financial independence or financial freedom need not be an elusive dream for the Juan’s and Pedro’s of our nation. Why not? Filipinos are generally hard-working. Just look at the growing number of Overseas Filipino Workers (OFWs) abroad and this will attest to the respectable work-ethics of the Filipino. Despite that fact, families after families continue to be plagued down with various financial concerns. Even many of our retired OFWs, who worked and sacrificed for a long-time, cannot speak of true financial freedom. Why is it that despite the Filipino’s industriousness, financial independence is still beyond reach?
Does that mean hard work with above average income not enough to gain financial independence? What does it mean to have financially freedom? According to Robert Kiyosaki in his “Rich Dad” series book, to gain financial freedom is to be free to do the most important things in life, like having lots of time to raise your children, having money to donate to churches, projects and charities, bringing jobs and financial stability to the community, having time and money to take care of your health, being able to travel the world with your loved ones. It is being free to do what is most important for you because money is not a concern.
Why can’t hard work alone bring a person to financial independence? Why is it that most are hard working but very few become wealthy? Financial Literacy is what is lacking with the majority. Real financial education was not given importance in the four corners of the classroom.
I remember my one and only personal experience, the closest to financial education, was our project in economics. The project was to “build your savings account by saving and depositing as often as you can in the bank.” The amount was not the one being graded but the consistency and discipline of saving and depositing in the bank. Although, my best friend and I literally went to the bank every day to deposit P20.00 each, I cannot remember anymore whether we were thought how to handle our savings. The seeds of our sacrifice did not grow into the tree that it should be because of the failure to water it with sustainable financial education.
There is a tremendous vacuum in the area of financial education in our country. The more than P5 Trillion Pesos in Short-Term Deposits, the 27.9% of the population below the poverty line*, the 24.5% of households with savings*, truly there is much to be desired in the area of sustainable financial education in our country that would translate to true financial wellness that is anchored in sound principles and personal discipline not on consumerism and materialism.
It is this vacuum that I personally wish to address in this blog. Somehow, with the rest of the advocates of financial literacy, I wish to be one with them in bringing more financial success to every Filipino home. And perhaps add 2 more Filipino Millionaires at a time.
*Statistics lifted from “Poverty Incidence Unchanged as of 1st Semester2012- NSCB” www.nscb.gov.ph
Consumer Expectations Survey 1st QTR 2013; www.bsp.gov.ph