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Filipinos as money experts: Clueless on bonds,stocks,
loansByDoris C. DumlaoPhilippine Daily Inquirer4:47 am | Friday,
June 28th, 2013
46 564 467
MANILA, PhilippinesOne out of every five Filipinos
from the middle to upper income groups claims to be an expert in
money matters. But a global
insurance giant recently found that members of these classes
perform poorly in a basic financial literacy
quiz.
Sun Life of Canadas latest annual study of lifestyles, attitudes
and relationships (Solar) showed that
Filipinos were typically confident about how they manage their
finances, with 20 percent considering
themselves an expert and sometimes even a specialist.However,
test scores from the financial literacy quiz given to a group of
respondents showed that only 8
percent got a score of more than 80 percent.
The median score was 50 percent, nowhere near the passing
mark.
Nobody among the respondents scored more than 90 percent, said
the research report that Mylene Lopa,
Sun Life Financial Philippines chief marketing officer,
presented to the media on Thursday.
The study was based on a sample of 1,100 respondents from the
Classes A, B and C across the country
with a monthly household income of P30,000 and above.
The respondents were between 23 and 55 years of age and were
interviewed face to face in the first
quarter of the year.
A 16-question financial literacy quiz was introduced this year
to measure the level of awareness and
knowledge of basic financial concepts and products, and the
capacity to apply such concepts.
ParadoxThe wide gap between Filipinos self-perception and actual
financial literacy level is cited by Sun Life as
the paradox of financial literacy.
When respondents were asked how they defined financial security,
the top answer was having e nough
bank savings. Eight out of 10 Filipinos were relying on bank
savings, overlooking other options such as
life insurance and investments, the research report said.
Putting ones savings in a bank account remains prevalent and
such an approach reveals how Filipinos
prepare or underprepare for tomorrow. Ones money is intact in a
bank account but with so little growth,
or even negative real growth, there is doubt if it can ensure
ones financial security, the report said.
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Eye-opener
Since the Solar study was launched five years ago, it has been
an eye-opener for Sun Life on designing
its financial literacy program, said Sun Life Financial
Philippines president Riza Mantaring at a briefing
that presented 2013 results.
The report showed us many interesting insights. For instance,
Filipinos seem confident in their
knowledge of money matters but in fact, lack knowledge of basic
financial concepts and how to properly
prepare for their future needs. These findings strengthened Sun
Lifes resolve to continue, expand and
enhance its financial literacy campaign, Mantaring said.
Optimistic people
The study found that Filipinos were an optimistic people. Asked
how they expected their financial situation
to change in the next three to five years, 87 percent expressed
a positive outlook.
The report said this optimistic outlook was a probable outcome
of the robust macroeconomic backdrop.
The Philippines is moving up, at a time when other countries are
reeling from weak economies, political
backlash and widespread unemployment, it said.
While the study revealed a lack of knowledge of some financial
concepts, Mantaring said it did indicate an
improving attitude toward life insurance. Life insurance is now
considered by a third of the respondents a
priority purchase for the next two years, she said.
Priorities
Asked about their priorities in the next two years, the
respondents gave the following answers: opening a
business (51 percent); purchasing a parcel of land (45 percent);
and getting life insurance (39 percent).
Other priorities were an education plan (39 percent), a
car/vehicle (37 percent), gadgets (37 percent),
health insurance (37 percent), house/condominium (37 percent),
house renovation (35 percent) and
durables/appliances (27 percent).
While 80 percent prepared for the future by putting savings
in
a bank, 30 percent were planning to put up a business. Only 20
percent were planning to get a life
insurance and 10 percent were planning to invest.
Filipinos must be encouraged to learn the basics of proper
financial planning and explore a wider array of
financial instruments to help them achieve their goals and
aspirations, the research said.
Quiz coverage
In the quiz, Filipinos were mostly knowledgeable about topics
relating to investment, annual interest rate,
credit card, asset, life insurance, real estate, debt, savings
accounts and current account. A majority
answered questions on these topics correctly.
They typically scored poorly in questions relating to preneed
plans, stocks, loans, mutual funds, inflation,
a healthy budget and bonds.
Multiple choices were given for each question.
The Quiz included questions such as the following:
1. Which of the following statements about inflation is false
?
a. Higher inflation means higher prices of consumer goods
b. Purchasing power is lower if inflation is high
c. As inflation rises, every peso will buy a fewer amount of
goods.
d. None of the abovee. All of the above
2. The formula for a healthy budget should be
a. Expense + income = Savings
b. Income savings = Expenses
c. Income expenses = Savings
d. None of the above
3. If a savings account has an annual interest rate of 2
percent, how much will a P100,000 deposit earn
after a year?
