In 2013 and early 2014, 90% of Filipinos had a hard time dealing with their finances. This statistic resulted from a survey conducted by Social Weather Stations (SWS) in partnership with Sun Life of Canada (Philippines) Inc.
Can you identify with 9 out of 10 of our kababayans who experienced shortage on top expenses such as household needs, school fees, medical bills, and loan payments? My family could! We have two sons in college and one in high school so you can imagine the challenges we face when tuition fee time comes around at least once a month!
Mind you, we have fully paid educational college plans for all three kids. Unfortunately, we are among the thousands of families who didn't get even one cent back from College Assurance Plans (CAP). I wish we knew about Sun Life back then. Perhaps things would have been much different today.
Anyhow, the survey was conducted during the first quarter of 2014 and was participated by Filipino adults nationwide coming from all sectors of society. This is part of Sun Life's continuing efforts to further understand the Filipinos' attitude towards personal finance. The country's top life insurance company also regularly conducts SOLAR (Study of Lifestyles, Attitudes, and Relationships), a personal finance research that analyzes how Filipinos handle money. You can read more interesting statistics in the 2012 article I wrote about Sun Life in Rappler.com here.
When asked what areas Filipinos experienced shortage (kakapusan or kakulangan) within the past 12 months, 74% cited household expenses (rent, utility bills, food), 41% said children's school expenses, 25% mentioned expenses for medical treatment, and 25% revealed loan payments.
According to 7 out of 10 Filipino adults surveyed, they consider the rising prices of commodities as the reason behind their financial shortage; 4 in 10 said it was because they were earning less, and 3 in 10 cited unexpected expenses.
Mylene Lopa, Sun Life Chief Marketing Officer, affirmed that price increase and unexpected expenses definitely have an effect on finances, "but these can be countered by proper financial planning. Inflation occurs every year and is something that we can anticipate, so we should prepare ahead of time as much as we can. This way, the impact is softened and is easier to handle, as compared to seeking a solution when the problem is already there."
So what steps had the survey respondents taken or will take to address their kakapusan? Seven out of 10 said they controlled or will control their spending, while 4 in 10 have resorted or will resort to looking for additional sources of income. Still, others addressed or plan to address the problem by borrowing from relatives, friends/neighbors, money lenders, or selling/mortgaging properties.
According to Lopa, it is good practice to be more mindful of one's spending. But, on top of that, people should have an emergency fund that they can dip into when unexpected expenses come. This kind of fund could be in the form of savings or an insurance policy that provides protection for unforeseen events. It also helps to learn more about proper financial planning from experts and seminars to find out about different financial solutions to address your various needs.
None of the respondents mentioned investing as a strategy to counter financial shortage though. "While more Filipinos are warming up to the idea of investing, it appears that there is still a huge number that is not considering this option, even though one can actually being investing for as low as P5,000 these days," pointed out Lopa. "We hope to change this scenario because we'd like to see more Filipinos enjoy the benefits of having their money work harder for them. To counter the state of being kapos, saving, getting insured, and investing is a good way to go."
FYI, June is Financial Independence Month! Make the bright choice and start changing the way you handle your finances! For starters, you may want to attend Sun Life's free seminars to be conducted in different parts of the country! Listen to Sun Life's Riza Mantaring and Mylene Lopa, and financial experts Randell Tiongson and Marvin Germo and be on your way to achieving financial independence faster. For more info, please log on to http://brighterlife.com.ph
* The March 2014 SWS survey was conducted from March 27 to 30, 2014 using face-to-face interviews of 1,200 adults in Metro Manila, Luzon, Visayas, and Mindanao with sampling error margins of +/- 3% for national percentages, and +/- 6% each for the four areas.