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It’s a question we all get every once in a while (especially as we get older):
“How do you manage your money?”
And like most “Adulting 101”-related stuff we strive to get a grip of, there is no perfect answer. Things like income, lifestyle, a person’s psychology about money, priorities, and other aspects vary from one person to the next — and these significantly affect how each of us manages our finances.
So to get a better idea of how Filipinos nowadays manage finances, we asked our readers a couple of questions — and more than a thousand of them responded.
Here’s a glimpse of personal finance in the Philippines, along with a few important tips to better handle your money.
What is Personal Finance?
In a nutshell, Personal Finance is all about the plans and ways we manage our money for both short-term and long-term needs.
It’s essentially all the money-related stuff we do on a regular basis — how we budget, save, invest, plan our cash flow, and more.
So whether it’s allocating our income for monthly expenses, paying for our child’s education, putting money in investments, paying off debt, saving for retirement, etc., — all these are linked to Personal Finance.
Why is Personal Finance Important?
Practicing the most effective and efficient ways to manage our finances affects the quality of our lives today and in the future.
Without a clear understanding of our financial situation, we’re exposed to greater risk should any unexpected money obligations or problems pop up today or in the future (which almost always happens) and miss out on the strategies and ways we can use to leverage our income and savings now to improve our financial status in the future.
Think of personal finance as a system, a basic set of rules and methods that we implement so we can achieve our current and future financial needs.
We learn all sorts of things in school, but sadly, almost none of it is about how we manage our finances.
And that’s why it’s very important for us to learn about personal finance, as it will help us understand both basic and advanced principles (along with actionable steps) that we can implement for achieving both our current and future financial aspirations.
Personal Finance Stats in the Philippines
The following answers are from respondents who have internet access (the survey was conducted online) so the data is not a perfect reflection of the country’s entire population.
It does, however, give us a unique glimpse into how some of our fellow Filipinos manage their finances. And their answers give us a better picture of how some of us will answer the question, “How do you manage your money?”
Ultimately, our goal is to provide data (and tips) that will be of use to you and anyone looking to get a better understanding of personal finance. And we hope this helps improve your own methods so you can reach your personal financial goals today and in the future.
Key stats and takeaways from our Personal Finance Survey
- 64.4% of Filipino netizens consider themselves financially literate.
- Our study shows that more than half (57.2%) are able to save 10% or more of their monthly income.
- 75.8% of our respondents don’t have an emergency fund with more than P50,000 in it.
- The research also revealed that 60.7% of respondents don’t have enough cash to cover a P20,000 emergency (or any kind of unexpected expense).
- Most of Filipino netizens (62.5%) follow a tight monthly budget for various recurring expenses.
- Only about a quarter of the respondents (24.8%) shared having a debt amounting to more than P20,000.
- 31.3% revealed having investments through various financial instruments (stocks, mutual funds, real estate, etc.,).
- About a third of the total respondents (32.2%) have life insurance.
- 40.2% of respondents have some form of health insurance package or HMO.
- 37.2% of our survey respondents are saving for retirement.
- Only 32.2% share having some form of a written financial plan.
- The survey results also showed that more than half of Filipino netizens (59.1%) have an active e-wallet or digital wallet account.
- Almost half of our respondents (45.7%) revealed that they manage more than 1 bank account – while the rest (54.3%) either have one only or are yet to open a bank account.
- The majority of our respondents (77.8%) do not own a credit card.
- Only a small portion of our respondents (14.1%) revealed spending more than P10,000 for shopping or entertainment per month.
- Almost half of our respondents (44.6%) shared that they have run out of money at some point during the last 12 months.
- Yet, most of our respondents (79.8%) didn’t borrow money from banks or financial institutions in the last 12 months.
- Most Filipinos (62.4%) spend their money on Food & Groceries.
Age and Gender
Out of 1,036 responses (at the time of this writing), the majority of respondents are women (more than 60%) and most are from the age group of between 18-25 years old (38.9%).
Would you consider yourself financially literate?
The majority of the respondents (64.4%) consider themselves financially literate. Financial literacy mainly refers to a person’s ability to understand their finances and effectively use various skills like saving, budgeting, and investing to meet their financial goals.
Do you save 10% (or more) of your income every month?
Data reveals that more than half of the respondents (57.2%) tuck away 10 percent or more of their earnings every month while the others (42.8%) don’t.
Do you have an emergency fund with more than P50,000 in it?
When it comes to having funds for emergency expenses, only about a quarter (24.4%) of the respondents shared having at least P50,000 (in various assets) to cover it.
Do you have enough cash to cover a P20,000 emergency? (from your own savings/emergency fund)
For covering a P20,000 emergency expense, the numbers improved for those who have it, albeit not by much at 39%. The number of respondents who reveal not having a Php20k emergency fund is significantly larger at 60.7%.
Do you maintain a strict/formal monthly budget (for daily expenses, monthly bills, etc…)?
Most of the respondents (62.5%) follow a tight monthly budget for various recurring expenses.
Do you have debt amounting to more than P20,000? (credit card, personal loan, car loan, etc…)
Only about a quarter of the respondents (24.8%) shared having a debt amounting to more than 20,000 pesos.
Do you have investments? (ie: real estate, stocks, mutual funds, time deposits, business, etc…)
Some of the respondents (31.3%) revealed having investments through various financial instruments (stocks, mutual funds, real estate, etc.,)
Are you insured (life insurance)?
About a third of the total respondents (32.2%) have life insurance.
Do you have health insurance or HMO?
About 40% of respondents have some form of health insurance package or HMO.
Are you saving for retirement?
Retirement planning funds take a portion of savings of 37.2% of the respondents.
Do you have some kind of a written financial plan?
About a third of our respondents (32.2%) share having some form of a written financial plan.
Do you have an active e-wallet or digital wallet (ie: Gcash, PayMaya, Coins.ph, etc…)?
More than half of the respondents (59.1%) shared having an active e-wallet or digital wallet account.
Do you maintain more than 1 bank account?
Almost half of our respondents (45.7%) revealed that they own more than 1 bank account while the rest (54.3%) either have one only or are yet to open a bank account.
Do you have a credit card?
The majority of our respondents (77.8%) do not own a credit card.
Do you spend more than P10,000 on shopping or entertainment every month?
Only a small portion of our respondents (14.1%) revealed spending more than 10,000 pesos for shopping or entertainment on a monthly basis.
Have you run out of money in the last 12 months?
Almost half of our respondents (44.6%) shared that they have run out of money at some point during the last 12 months.
Did you borrow money (from banks or other financial institutions) in the last 12 months?
Most of our respondents (79.8%) didn’t borrow money from banks or financial institutions in the last 12 months.
Where do you spend the most money every month?
When asked which segment of their expenses receives the bulk of their budget, the majority of our respondents answered Food & Groceries (62.4%).
Utility expenses and education come in a distant second (8.5%) and third (8.1%) spots, respectively.
Personal Finance Tips for Filipinos
Personal finance comprises 5 main categories. Each one plays an important role in ensuring a balanced approach towards hitting your financial goals.
How you understand them and leverage your options will be crucial in your financial growth and success.
It refers to the source of money that you receive on a regular basis through employment or your business/services. Your salary, bonus, side hustle earnings, are examples of income.
How much income you make plays a big role in determining the amount of flexibility you’ll have in other areas. Here are a couple of tips for building your income:
1. Track (and increase!) your net worth
It all begins with a quick and personal financial audit. Net worth is essentially how much you’ll have left if you subtract everything you owe/pay for from everything valuable you own.
Knowing how you’re faring financially will help you lay the right plans and goals. Because once you become financially self-aware, you’ll be keener in thinking of ways and open-minded to do stuff that will help you increase your net worth.
2. Invest in yourself
Learn new skills, improve existing ones, enroll in courses/training in a niche that interests you, double-down on the things that help you develop a wider or more focused-skill set that you can leverage to get paid more or increase your cash flow.
With a better and wider skill set, you’ll have more options in generating additional income (see below).
3. Build multiple income streams
Need more income? Look beyond your current job and think of ways you can generate extra cash. The following suggestions might just land you that perfect extra income source to boost your cash flow.
- Start a side hustle – A.K.A “sideline” in Pinoy parlance, leveraging your extra time and effort for additional income is a good way to increase your cash flow. Here’s a list of side hustle ideas you can start now.
- Freelance – Freelancing is similar to side hustle, but mainly relies on your most often-used skills (usually related to your job or hobbies) and offer it as a paid service to clients. Our in-depth guide shares tips and recommendations on making money freelancing.
- Small business – You probably had a business idea or two before, why not give it a try? It doesn’t have to require a large capital. As we’ve shared in this article, there are plenty of small-scale businesses out there that you can start with little capital.
- Make money online – Love to write? You can blog and publish your content (and earn from it via ads or affiliate commissions). Set up a dropshipping or e-commerce store. Buy and sell websites. Set-up a YouTube channel and start producing videos. There’s a long list of potential money-making ideas you can do online. With the right skills and diligence, you can turn a passion project, hobby, or interest into something that can generate extra income.
4. Stay out of debt
Debt is not necessarily a bad thing. Sometimes, it’s a necessary “move” depending on your financial situation (or strategy).
In general, however, accumulating a lot of debt is not a good idea, as interest rates can quickly turn a reasonable amount of debt into a massive snowball of a headache.
Not to mention the psychological toll it brings (constantly being worried about it is bad for you both mentally and physically).
As most people will tell you, the first step to solving debt problems is to stop borrowing more. Choose a strategy for paying off your debt, be more disciplined in managing your money, then set goals.
The next main area in personal finance is Spending. It refers to the act of paying for various goods or services that we need through cash or credit. For some people, this is the most difficult aspect to control.
However, personal finance experts posit that the secret to “winning” in this category is being conscious of how you spend and developing a simple system for allocating your expenses that aligns with your short and long term goals. Here are a few helpful tips:
- Write a personal financial plan
- Stick to a budget
- Automate how your money gets spent
- Keep expenses low
- Use apps that help you manage your finances
How consistently you allocate your savings will be a key determinant to achieving success in other areas of personal finance.
As the famed author of Rich Dad, Poor Dad, Robert Kiyosaki said:
“It’s not about how much money you make, but how much money you keep.”
Consider the following suggestions to help you save more efficiently and meaningfully.
- Pick a savings technique that works for you
- Open a savings account
- Automate your saving process
- Build an Emergency fund
- Consider a Time Deposit account
- Leverage digital bank options for hassle-free saving
Investing (in the context of personal finance) is the allocation of money with the expectation of generating an income or profit.
Saving money isn’t the only way to build your assets. In fact, it’s considered a “slow” method when compared to investing if we take interest rates and compounding into consideration.
There’s a wide array of investment options you can choose from that matches your risk tolerance and overall financial strategy.
Here’s a list of investment options you may want to consider (click on each link for a comprehensive guide).
- Stock investing
- Mutual Funds & UITF
- Real Estate
- Microlending or P2P lending
- VUL Insurance
- Fixed Income Securities
- PAGIBIG MP2
- Real Estate Investment Trusts (REITs)
Refers to various services or products that act as a financial safety net for you and your family during unforeseen events. Whether it’s having money for hospital bills, car repairs, medical check-ups and treatment, and in the worst-case scenario (knock-on-wood), death.
Preparing for such events is a lot more important than most people think. Having that financial hedge against such expenses not only saves us from a ton of potential debt, it also gives us the peace of mind that we won’t be caught by surprise should the unfortunate thing happen.
Here are some of the most common services and products specifically made to protect you and your loved ones.