MANILA – Financial education (FinEd) in the country needs an additional push to help more Filipinos be prepared and literate financially.
In a virtual briefing on Thursday, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said the results of the World Bank’s 2015 financial literacy survey and the Central Bank’s 2019 financial inclusion survey showed that “about half of Filipino adults were unable to correctly answer questions that test their knowledge on the impact of inflation on their purchasing power.”
Both surveys showed that “two-thirds of Filipino adults were also unable to answer questions on simple and compound interest rates,” Diokno said. “The concept of compound interest must be fully appreciated in order for consumers to use credit responsibly and pay the loans in full and on time.”
Simple interest is calculated based on the principal amount of a loan while compound interest is calculated using the principal amount of the loan and the interest that has accumulated from the previous period.
Diokno said it is “crucial for Filipinos to understand the value of savings in banks and choosing prudent investment instruments.”
“The survey results indicate a clear need to intensify our FinEd programs with special focus on these concepts and encouraging good learning values,” he said.
FinEd usually involves managing personal finance and knowledge on savings, insurance, real estate, payments, budgeting, retirement, tax planning, and the like.
The BSP intends to upgrade financial literacy by partnering with groups over the medium term.
“We will continue to measure and monitor (the) progress of our programs as we move forward,” Diokno said.
He said the importance of FinEd was highlighted since the pandemic began because of the need to be “financially prepared for contingencies and external shocks.”
Because of the pandemic, Diokno said, Filipinos are now more motivated to learn and eager to apply personal financial management principles, “such as prioritizing needs over wants, living below one’s means, looking for additional income stream, and saving regularly when they can.”
He said Filipinos have become more serious in protecting their money against scams.
“The BSP and its financial partners are also taking advantage of this opportunity to disseminate finlit (financial literacy) messages to our target audiences and the public. We have a full work program consisting of several training of trainers, webinars, and learning sessions for this year,” he added. (PNA)
