By Vincent Mariel P. Galang, Reporter
AS we spend our money on things that we want, we tend to forget to save for the things that we need.
“Without financial literacy, or even basic financial literacy you get yourself into massive financial trouble, so in the Philippines like many other countries, when people receive their salaries, they tend to spend it first, which is a great short-term relief, but the next day, what happens? How do they, then, manage their money for the rest of the month, or the rest of the two weeks?” Greg Martin, group chief executive officer of the Praxis Company said in an interview on Feb. 13.
“The impact is significant,” he added.
Noting a 2014 study by the Standard & Poor’s Rating Services, 25% of the adults surveyed in the Philippines were financially literate, which is way below the global average of 33%. This is the problem that Mr. Martin, and his company is trying to address through the Praxis gameplay. It is a gameplay experience which stimulates financial challenges and pushes players to realize the importance of mastering money.
“Praxis, or financial literacy, isn’t about ‘don’t spend money.’ It isn’t. It’s about how you manage your money. The real thing about financial literacy is planning. It’s about understanding what to do with the money that you earn. You should be putting money away for savings. You should have some insurance protection, and you should have some long-term investments for retirement, or for your kids’ education. Financial literacy, what Praxis tried to do, is to show people how important it is to do this, and do it through a gameplay,” he said.
Since its creation in 2003 in Singapore, Praxis has taught not only adults, but also kids on how to properly manage their money. It has been in the Philippines for about four years now and has been partnering with schools like Jose Rizal University, which has incorporated the gameplay in its their curriculum, and companies like SunLife Financial, to reach more people and educate them of the importance of saving for their future. Clients either lease or get licensed to be able to conduct a session. The company designs the game according to the audience that will play the game.
“We have three focuses in the business. The first is schools, educating kids on financial literacy. The second is financial wellness, so corporations have wellness programs, and we bring in the financial element to it. Third is financial services, so working with insurance companies, asset managers, banks,” Mr. Martin said.
The company was recently awarded with a $3-million investment from Triple P Capital to help in their aim to boost financial literacy in Asia, “They’ve invested $3 million into the business to help us… take one step back, build some more foundations, recruit people, invest in marketing invest in product development, and to further support our clients, and work with more,” Mr. Martin said.
FINANCIAL LITERACY IN THE PHILIPPINES
With the 25% financial literacy in the country, Mr. Martin said Filipinos should be alarmed by it, but this is not unique in the Philippines.
“They are extremely low literacy levels, but again this is not unique to the Philippines. There are low-levels everywhere,” he said.
He also noted that as money gets complicated and financial products become more accessible, education has not improved yet.
“The complication of money has grown significantly over the last 15, 20 years… so what happens when things get complicated, but the education hasn’t actually moved is there’s a gap,” he noted.
“Stock markets have become more accessible,” he said, adding that trading platforms have allowed people to easily access and directly buy shares.
“But has anyone ever been taught how do you know when is the good time to buy shares? Is it a short-term investment? Is it a long-term investment? Products have become complicated yet easily accessible. I think it’s lack of education basically from, be it from governments through to financial institutions,” he said.
Nonetheless, he recognized the efforts of the government in order to address this problem and its big role in boosting financial literacy in the country, but lack of action is also another problem.
“One of the really good things in the Philippines is that it’s really going to the forefront of being a key leader in financial literacy. The BSP (Bangko Sentral ng Pilipinas), Department of Education (DepEd), Insurance Commission (IC), SEC (Securities and Exchange Commission), are coordinating, basically, to drive the importance of financial literacy in the Philippines,” he noted.
The government has partnered with companies to educate the Filipinos of the importance of money management. One of which is the program launched by DepEd, BSP, and Banco de Oro (BDO) Foundation that seeks to educate public school teachers, non-teaching personnel, and students on how to manage their finances through short videos.
“As it affects everybody, it covers all demographics, all geographies, an all cultures, because of that, it is, actually, important that governments, administrations have national policies and approach to drive and support financial literacy,” he said.