Many Filipinos found to be still dependent on debt

Posted on March 08, 2016

DESPITE a strong savings record, many Filipinos were found to remain largely reliant on debt to get by and are still not well-versed in investing their money efficiently.

A MANULIFE survey found that Filipinos are still reliant on debt even as they have strong financial discipline. -- BW FILE PHOTO
“The latest Manulife Investor Sentiment Index (MISI) survey reveals that despite strong day-to-day financial discipline, Filipino investors have relatively high levels of personal debt (excluding mortgages) which could jeopardize their long-term financial security,” Canada-based insurer Manulife Financial Corp. said in a statement yesterday.

Nearly all of the 500 people surveyed said they track their expenses regularly and are able to set aside part of their income as monthly savings, while 46% said they have set a target amount for savings and started saving before reaching the age of 30.

Monitoring savings and expenses are signs of “good financial discipline,” Manulife said, with 91% of Filipinos claiming that they have sufficient funds to support their needs in a span of five years. Nearly three-fourths also said they are likely to meet their target within four years, as in the survey.

“However, despite this strong record in financial management, the survey revealed relatively high levels of personal debt. Four in 10 (41%) Filipino investors carry debt -- the second highest proportion in the region after Malaysia,” the insurance firm said.

“A third of respondents cited daily living expenses as the main factor contributing to their debt, which could indicate that investors’ ability to save regularly may rely on the use of credit to pay for day-to-day living expenses,” the report added, while other loan items include children’s current education, and medical expenses, among others.

Average debt across age groups stands at P291,582 for those aged below 35; P207,418 for those aged 35 to 49; and P143,958 for those 50 and older.

To add, 80% of investors said they could have done “better investment planning” as to where they placed their savings for the long term.

Survey results also showed that more than a fourth of Filipinos choose to park their savings as bank deposits or in investments “with no specific purpose,” which meant they failed to maximize their extra funds to generate returns.

“While it’s positive that Filipinos demonstrate good financial discipline, effective financial management is about much more than just tracking your expenses and saving regularly,” said Ryan Charland, president and chief executive officer of Manulife Philippines. “Investors also need to ensure they are managing their day-to-day spending to avoid falling into debt, and that they have clear plans to get the most out of their savings in the long run.”

The MISI is a survey conducted every six months to track investors’ views across Asian markets covering aspects of personal financial planning. Some 500 middle-class to affluent residents based in Metro Manila and Cebu aged 25 and above were tapped as respondents via online interviews, who stand as primary decision maker for financial matters and are current holders of investment products.

Other economies covered are Hong Kong, China, Taiwan, Japan, Singapore, Malaysia and Indonesia. -- Melissa Luz T. Lopez