MINDFUL

By Jay Ledesma

EVERY Filipino parent wants the best education for their children. Every working Filipino looks forward to good and comfortable retirement life. Every Filipino wants to have the best medical care as needed. All these need advanced preparation. The question is: Are Filipinos making the right preparation? 

Let us look at the facts. 

According to the latest data from Bangko Sentral ng Pilipinas (BSP), only 29% of Filipino adults have bank deposits in 2019. Though this is already a 6% increase from 2017 data, it’s still one of the lowest savings rates in Southeast Asia. Did the 71% save their money somewhere else, which they can use during crunch time? 

Manulife Investor Sentiment Index (MISI) survey showed Filipino investors only have a personal income equivalent to 3.6 months set aside for retirement, the lowest in Asia (with an average of 2-3 years).  What happens after 4 months into retirement? 

Further,  of the Philippines' total health expenditure of PhP 906billion in 2019, a high 47.9% or PhP379.7 billion was shouldered by the patients themselves. While our insurance penetration rate remains at a low of 1.69%.  This is somehow validated by the very Iow insurance claims received by life insurers amidst the Covid-19 pandemic. Should our savings really have to be exhausted on our medical needs? 

With many Filipinos wanting the best education, retirement, and medical services for themselves and their families, why is it then that many have not prepared or are still not preparing for the future? What’s keeping them from saving and investing for life’s expected and unexpected events? 

Not enough money left to save. This is always the number 1 reason given by most Filipinos without savings. However, if we will accept this reasoning, then all of us will not have savings.  If the formula we will use is Income-expense = savings, then chances are nothing will really be left for savings, as there is no ending to what we can spend on. To make savings happen, we should follow instead the Income-savings = expense formula. We have to force ourselves to do regular savings no matter how small the amount is. 

Perhaps, it’s not really the fund that is lacking, but it’s our discipline. 

Lacks awareness on how to do it. A big chunk of our population either has very little knowledge of how to save and invest or they learned about this much later in their life. And because they have limited knowledge, their access to the different savings and investment instruments is also limited or nil. Awareness is higher among Filipinos with a higher and better income. The higher the income level is, the more knowledgeable and the more access they have to these instruments. That is why many are under the impression that only the rich ones can save and invest. That they need to have lots of money to make money. But this is not entirely true. If only they knew that with just PhP50, they can already start saving/investing (thru GCash). Not many will have PhP500 or PhP5000 to save regularly but surely many can spare PhP50.  Access to these opportunities should not be exclusive to only a few. They should be accessible to more Filipinos, regardless of their income class. 

The ‘Bahala Na’ Attitude. Most Filipinos want to leave everything to chance. This easy-go-lucky attitude makes Filipinos tend to leave their future to fate. Or worst, they live the fate of their future in the hands of their family members. Since Filipinos are also known for their close-knit family ties, this positive trait has also become a disadvantage. Some parents expect or impose on their children to take care of them financially when they are retired and old. I am sad to hear some friends saying, “We don’t need to save since we have our children to take care of us when we get sick and old”.  While our children can help us, it should be done voluntarily and not as an obligation. By then, our children will have their own families to look after. We owe it to ourselves to maintain our dignity despite sickness and old age.  

The YOLO mentality. YOLO, meaning You Only Live Once is a popular saying among the Gen Ys and Zs, which constitute more than 50% of our population. YOLO promotes the idea of enjoying the present and living fully the NOW. When you’re young, retirement is usually not top of mind. It’s too far ahead, like 30-40 years from now. They would rather spend on gadgets, travel, eat out, buy properties, and on everything that they could experience. As the benefit of savings and investments is something they cannot immediately experience, it’s demoted to the bottom of their priority list. Exposing our youngsters to Money Management 101 at an early age might give them a better appreciation of their priorities, regardless of which generation they come from. 

Can still work after retirement. For many, retirement does not mean a complete stop from working and earning. Sometimes, it’s just a shift from being employed to starting a business or being a freelancer. Especially nowadays when online jobs abound, many retirees see themselves still capable of earning long after they have retired. This post-employment income opportunity somehow downplays the importance of having the funds to sustain our lifestyle once retired. Now, there is nothing wrong with working and being productive during your retirement. But you should be doing it because you want to and not because you need to. You should already be doing the things you love to do and not those you still need to do. There should be a point in our life when we can just enjoy a walk in the park and smell the flowers. 

Clearly, Filipinos still have a long way to go when it comes to Financial Literacy. We call on financial institutions like banks and insurance companies to do more financial literacy programs so more can be educated and empowered to take charge of their financial situations. Let’s have more affordable savings and investment products and services, like the GCash money market fund, that can encourage more people to start saving even with a small amount. Let’s also institutionalize the inclusion of money management 101 in our school curriculum. It’s never too early to learn. We call on all the Financial Advisors to be more persistent in making people listen as you help them prepare for their future.

There’s a lot to be done and a lot we can do to protect our dreams and prepare ourselves to live the better life we deserve. 

About the Columnist

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Ms. Jay Ledesma writes about local tourism and business bits that delve on investments and insurance.