Study: Average Filipino only has 9 weeks of savings

By MARIE ANTONETTE C. REYES
Special to BusinessMirror


Filipinos may say they are satisfied with the quality of their lives, but few feel they are financially secure, with the average Filipino having just nine weeks worth of savings to tide him through in the event of job loss or disability. Majority say they are not financially ready for retirement, and nearly half expect financial assistance from their adult children when they retire.

These are among the highlights of a study commissioned by Citibank on the financial intelligence of consumers across the Asia-Pacific region, including those from the Philippines.

The survey also scored respondents on 11 different questions closely related to financial well-being to come up with a country financial quotient, with a maximum possible score of 100. The Philippines had an average financial quotient of 47.8, with 62 percent of respondents having a score of less than 50.

This score is hardly surprising, considering that 53 percent of respondents said they have average or poor overall understanding of money management and personal finance. In fact, while Filipinos generally appreciate the value of saving, only a handful or 33 percent of respondents said they are able to save every payday as a habit. Another 51 percent reported saving money when they can, while 14 percent admitted to rarely saving.

Conducted by Australia-based CxC Consulting, the Citi Fin-Q survey covered 400 respondents across the country. Respondents were between 18 and 40 years old, owned either a bank account or a credit card, and had an average annual income of P376,000. The survey was administered online in the last quarter of 2007.

A troubling finding was that only 31 percent reported to having enough savings to last them through the next three months if they continued to pay their regular expenses, with the average Filipino having an average of just nine weeks worth of savings. In fact, 33 percent of respondents said their savings would only last from one week to four weeks. Another 14 percent admitted they did not know how long it would take before they ran out of money.

Alongside this was the finding that only 59 percent of respondents felt secure in their present jobs. “If they lost their jobs tomorrow, or suddenly fall ill and cannot work, there will be nothing to tide them over the hard times, said Agustin Davalos, Citibank Philippines retail bank director.

The study also showed that only a minority, or 33 percent of respondents, are able to stick to a budget. Majority, or 58 percent of respondents, revealed they made a budget but did not follow it, while 9 percent said they did not plan their budgets at all. Abby Limqueco-Chan, vice president for marketing, noted that those found to being regular savers are the same people who were able to stick to their budgets.

As a result, managing cash flows was shown to be an important concern, with 60 percent of respondents reporting to be revolvers of credit card debt. Of this number, 22 percent reported to paying the minimum amount on their outstanding credit card bills, while 38 percent said they paid more than the minimum amount due. The remaining 40 percent said they paid their card bills in full.

Long-term financial planning for retirement and emergencies was also shown to be lacking. Only 32 percent of respondents said they had enough insurance cover, even if another 36 percent said they had life insurance. Another 32 percent said they had no insurance coverage at all.

Retirement planning was also shown to be quite poor, with 17 percent having no idea how much they will need to retire and another 28 percent reporting they have not started planning for retirement at all. Only 13 percent said they have a retirement plan and are on track to cover their retirement needs. The remaining 42 percent said they were not too sure about what they needed but had some savings. Moreover, only 5 percent of the respondents had already prepared an updated will.

Still, Filipinos remained optimistic regarding their financial future and were generally satisfied with their quality of life. At least 77 percent had a positive outlook on their financial future, with 19 percent saying they were very optimistic and 58 percent claiming to be optimistic about the future. Only 23 percent admitted to being worried, and on cross tabulation, were shown to be the same individuals found to be financially ill-prepared and not regular savers. Chan noted that in general, younger respondents were more optimistic than older ones, which is natural because they have less financial pressures.

Moreover, only 36 percent of respondents reported they are not satisfied with the quality of their lives. These, noted Chan, were the people who had less income, were more worried about their financial future, and were not secure in their current jobs. At least 58 percent said they were satisfied, while another 6 percent reported they were very satisfied with their lives. These were the same respondents with a better approach to expense management and savings.