It has been a known fact that Filipinos are lagging behind many Asian countries with regard to financial literacy. Facts and figures such as savings, insurance, investments and other data will show how far we are behind countries like Singapore, Thailand, Hong Kong, Malaysia, etc.   Previous studies also points out that Filipinos do not prepare for retirement and are not keen on investing their money properly.

That was then, this is now.

Global financial services conglomerate Citi runs an annual survey called the “Fin-Q Survey”.  What is this survey about? According to Citi, the ‘financial quotient’ is a measure of the financial well being of respondents – the respondents were all over 18 years old and either owning a bank account or holding a credit card.

Previous surveys have showed the Philippines  below the passing mark for the region and well below some ASEAN members. But in 2011, the results of Citi’s Fin-Q Survey shows that things have improved for the Filipinos. The survey has a ‘passing’ score of 50 and the Philippines was able to register an all-time high of 52.6 – the first time we breached the 50 mark. While 50 is hardly a hurdle we should be happy about, I am ecstatic that our numbers are indeed improving. The survey is a sampling of 500 individuals.

Sanjiv Vohra, Citi’s country officer for the Philippines said “the survey numbers in the Philippines are indeed very encouraging. The results show that Filipinos are becoming more determined to take charge of their finances and are responsible users of credit.” Further, Vohra also said “Filipinos are also looking at investments in the form of cash, real estate and insurance to ensure a comfortable retirement.”

Some interesting figures from the 2011 Fin-Q Survey of Citi for the Philippines:

1)      Retirement savings is up by 11% and 42% of the respondents claims they save money every payday.

2)      60% of respondents said they paid their credit card outstanding balances in full every month.

3)      70% of the respondents said they have used the internet or their mobile transactions while 52% of them prefers electronic transactions over personal visits to their branch – the highest among all the countries surveyed.

4)      Over 60% of the respondents felt they were in a better financial position in 2011 as compared to 2010.

5)      80% of the respondents are more optimistic about their financial standing in the future.

The average score of the region covered by Citi’s Fin-Q Survey was at 54.5 percent, few points up from the previous year’s 53.2 percent score. The countries that were covered by Citi’s 2011 Fin-Q Survey were Philippines, Australia, India, Indonesia, Korea, Singapore, Taiwan, and Thailand.

Sanjiv Vohra says that the improvement in the Filipino’s score (and other Asia-Pacific Countries) in financial quotient (or literacy) is a result of efforts to promote financial literacy.

While I am ecstatic that we are showing improvements, we must aim at a much higher rate – maybe 60-70% if we are to really experience sustainable prosperity. Further, a bigger challenge is to bring financial literacy to the masses and we need to do this as quickly as we can. How? We need more dedicated advocates and we need to be more passionate in championing this cause.

A much higher financial quotient for the Pinoy? Yes! We will get there… I believe we will get there. Stewardship and education is all we need.

Blessed is the nation whose God is the LORD, the people he chose for his inheritance. – Psalm 33:12, NIV

When dealing with money issues, one must always be aware of deadly behaviors that will cause financial havoc and I call them the 3 dangerous money attitudes: Greed, Fear & Ignorance.

Greed has been man’s downfall since time immemorial. When it comes to our finances, greed clouds our judgment and in many cases it can even make us compromise our values. In investing, greed makes one too optimistic on possible returns based on some experience or even the potential of remarkable growth. While the principle of risk & return always dictate the performance of one’s investment, greed will make one go beyond his risk tolerance in anticipation of fantastic yields. In business, greed makes one engage in cut-throat enterprise and often times have collateral damages like ruined business relationships and even legal issues. After all, it is the love of money which is the root of all evil (1 Timothy 6:10). In the movie Wall Street, Gordon Gecko made a famous line that seems to have been the mantra of many… “Greed is good” (‘That greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit’). Well, it is because of greed that there was the recent financial tsunami which almost put the whole world economy into chaos. In fact, the US has yet to recover from their financial crisis which was really a result of greed. Greed is often times the reason for our economic woes. Regardless of how we romanticize it, and despite Holywood’s dangerous seductions, greed is not good.

Fear is not necessarily a bad behavior. In fact, fear allows one to act in prudence and makes us check if we are already becoming greedy. The issue here is too much fear, or crippling fear. Many a times, people would not take any risk at all when it comes to money and they will find themselves with hardly any financial growth because of it. It is a common notion that Filipinos are ultra conservative when it comes to money and to prove a point, one only needs to look at where our money is actually invested – locked in 30 to 90 day short term deposits that give you almost negligible returns. While keeping your capital safe is important, we must also be reminded that inflation is constant and it will erode our wealth. To illustrate, let’s assume that you place your savings in short term placements like time deposits earning 2% p.a. and you don’t mind the low return because safety of capital is your paramount concern and  you will probably keep the money there for maybe 3 to 5 years . Let us assume that during those years, the inflation rate will be at an average of 5%, you are actually losing real value in your money with the erosion of its purchasing power by as much as 3% per year. In the end, you will actually experience a real loss despite having no capital loss. In risk management, risk avoidance is not always a good choice because avoiding risk also means one can’t gain. I really like the Parable of the Talents (Matthew 25:13-40) – it is as a very good illustration of fear.

Just like greed, ignorance is a very dangerous attitude. While people lose money because of greed or too much fear (in purchasing power), people do so knowing what they are getting into. Losing money because of ignorance makes one well, ignorant. It is said that you should never ever, ever, ever, ever put your money into something you don’t understand. It is ironic that despite Filipinos being risk averse (ultra conservative), we are also prone to a lot of scams. Citibank came up with a survey that says our FQ or financial quotient is very low as compared to other countries. Financial education, though immensely important, is not on the top mind of our citizens. Schools look at financial education from a text book approach rather than on a personal finance perspective and many homes will not discuss money issues until the family is in severe financial situation. I counseled so many individuals that are in dire financial conditions and most of the time, the core of their problem is ignorance – financial ignorance.

So what is the solution to all these? Financial education and checking one’s heart. We need to live a life of purpose which will keep our greed in check. It is not hard to realize that our purpose goes beyond ourselves, isn’t it (Matthew 6:33)? Overpowering fear is an issue of faith – we need to believe that we are not given a spirit of timidity, but a spirit of power (2 Timothy 1:7). The only fear we should have is a godly fear (Psalms 111:10). As to ignorance, we only need to open our hearts and minds and embrace learning and seek godly wisdom (Proverbs 8:12).

Catch my event “Steps to Financial Peace” with guests Francis Kong, Paulo Tibig and Jayson Lo. Details at https://www.randelltiongson.com/steps-to-financial-peace/

I just finished a Practical Finance Seminar in Singapore a few hours ago and it’s inspiring to see a few dozen Filipinos working hard outside the country, sacrificing and doing their best to have a better life. It is even more encouraging to see them getting financially educated even if they have to listen to a boring speaker like me. Sights like this makes my job fulfilling and keeps my passion burning to help Filipinos get more and more financial education.

I saw a tweet from my good friend Susan Ople of the Blas F. Ople Policy Center where she stated statistics on OFW remittances that blew my mind away. She stated that in 1975, the remittances amounted to US$ 103 Million. Today, remittances are now up to US$ 2 Billion a month!

Unfortunately, I need to state some facts that continues to disturb me and should disturb every other Filipino. A recent study conducted to determine the financial quotient of Filipinos revealed that only 1 out of 10 Filipinos prepare for retirement. NEDA numbers placed the average savings rate of the Philippines at 16% as compared to Indonesia, Malaysia, Thailand, Hong Kong and our other neighbors well above 30%. Less than 50% of Filipinos actually own their home, and that includes those whose homes are mortgaged. Less than 0.5% of Filipinos invest in the Stock Market. Less than 15% of Filipinos (family heads) own Life Insurance. Investments in pooled funds (Mutual Funds, UITFs, Variable Life) remains to be amazingly low.

With the huge amount of remittances being sent to the country in the last 30 years, one would assume that Filipinos today would have more money and a vast majority of our population would have a secured financial future. With the facts I wrote, it seems that money being sent home plus the money being generated at the home front does not end up being put to good work by saving and investing it. Our capital markets continues to be underdeveloped despite the nation having excess liquidity. If money is not being invested for the future, then one can logically assumed that almost all the money now is being used for consumption. The level of consumption of the country has reached an alarming rate juxtaposed with dismal savings rates being experienced.

Why is this so? I dare say that despite an increase in income, us Filipinos have yet to fully develop our zest for financial education. Financial literacy is a political, cultural and social issue — one that must be given preferential attention by every Filipino. If not, all the growth in remittances coupled by improvement in local income will be for naught if one will not have a secured future.

Despite the daunting task, I and a number of passionate people will continue to advocate financial education despite the odds even if it take one Filipino at a time. I pray that more and more will heed the call to do our part in bringing about a big change in our attitudes about money and heed the path towards Financial Peace.