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

I am honored to have a guest post by my good friend Edmund Lao. Edmund is a Registered Financial Planner and a columnist for Business Mirror. He is also in the forefront of financial literacy for Filipinos.

——————

The Right Education by Edmund Lao

Education  is the formal process by which society deliberately transmits its accumulated knowledge, skills, customs, and values  from one generation to another. Whatever knowledge we acquired from experiences, experiments and discoveries of the past generations became the basis of our education today. Without formal education nowadays, one is surely bound to be bracketed in lower caste. Such importance is given to education that the status of a person depends on what school school he or she graduated from. Taking a look at the present , it cannot be denied that education has become a luxury already. In the early 80s, tuition fees cost only around Php 50 per unit. Tasking a full load will mean only around a thousand per semester. Nowadays, the fees range from Php 30,000 to Php 200,000 per semester. Worse, the quality of education is not even at par with that of our Asian counterparts.

Just imagine the hardship all the parents have to endure just to have their children finish schooling. Then when the graduate finds a job, unless he comes from an exclusive school, the compensation he will receive pales in comparison to the expense incurred to finish his course.

Then the new graduate will be in the rat race, taking the same road traveled by The Tired, The Retired, and The Re-Tired. This is because our current educational system gave too much emphasis on the technical aspect. Our system gave little importance to teaching the basics and the values to our generation. Ever wonder why we have corrupt people in the government and in the workplace? The only culprit is the lack of right education. The more information and knowledge we have now, the more ignorant we become. The more ignorant we are financially, the more risk we make in handling our finances. Just observe. If really we are more educated especially in this high technology age, why are there more people who cannot make both ends meet despite the fact that they are earning good income? The painful truth is that more and more people are having low emotional and financial intelligence quotient.

To a certain extent, Robert Kiyosaki was right in saying that our current education system is designed to make us employees rather than entrepreneurs.  His biological dad had an excellent education and great job, yet constantly struggled for wealth. His “poor dad” followed all the rules, yet died penniless. His best friend’s dad, on the other hand, dropped out of school but always asked himself how he could make more money. The “rich dad” was a savvy businessman and investor, however, and become very prosperous. We have also our version of Rich Dad in the persons of Henry Sy, John Gokongwei, Lucio Tan, etc. They never finished schooling but they knew the basics of creating wealth. I am not emphasizing that our youths drop out of school and become wealthy. What I am driving at is that

unless schools modify their curriculum, definitely there will be more future “poor dads”. Their experiences and the basic principles of finance can be shared to inspire the students to emulate them in terms of growing wealth the righteous way… Doesn’t it the progress of a country depends on the citizens comprise it? If majority of the people belong to the poor bracket, no matter how good the economy of a country is, it will still belong to the so-called Third World countries. Just take a look at our more progressive neighboring countries and see the difference. Most of these countries have a savings ratio of more than 30% while we are at around 15%. The only way for a country to upgrade its current status is to help educate its citizens be financially aware.

There are two viable solutions:

First is to teach children at home and create the mindset and habit of saving money. I,  for one, teach my kids by example. It is very important to practice what you want to teach. I have my own piggy bank to show them I save and now they have their own piggy banks. Whenever I give them coins, they automatically put it into their piggy banks.  What RFP Randell Tiongson said is true, that personal finance is 80% behavior and 20% knowledge.

Second is to include personal finance as a curriculum starting from elementary up to college as a continuation and strengthening of what was learned at home.. To some, personal finance is boring but it depends on the professor. In fact, having heard RFPs like Randell Tiongson, Efren Cruz,  Alvin Tabanag speak, I can say that they help create interest and excitement in the minds of the audiences. Schools have been including minor subjects which have no bearing on the course.  Why not include personal finance subject which can create positive impact on their lives later. If the government wants to create a progressive Philippines, then make financial education an investment that will give the country an unlimited return.