Filipino businessmen tend to have high levels of personal debt which could jeopardize their long-term financial security, a survey commissioned by insurance company Manulife Financial showed Monday.
The latest Manulife Investor Sentiment Index showed four of 10 Filipinos carried debt, with the proportion being higher among those aged 35 and below. This was the second highest proportion in Asia, after Malaysia, according to the insurance company.
About 41 percent of Filipino respondents had relatively small amounts of debt ranging from P5,000 to P24,999, while 7 percent had debts of P500,000 or more.
“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,” Manulife said.
“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. 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,” said Manulife Philippines president and chief executive Ryan Charland.
Manulife Investor Sentiment Index is half-yearly proprietary survey measuring and tracking investors’ views across eight markets in the region on their attitudes towards key asset classes and issues related to financial planning.
It said while Filipinos were prudent savers, more than 80 percent regretted some investment decisions, suggesting they were unable to effectively invest their savings for the long term.
The survey, however, found out that Filipino investors were among the best in Asia in terms of their savings and expense tracking behaviors.
Almost all investors surveyed (99 percent) tracked their expenses regularly and managed to save part of their income each month, which were key indicators of good financial discipline.
“Apart from daily living expenses, a large share of the debt is driven by outlays for children’s education, medical expenses and discretionary expenses, indicating the relevance of wealth management products to help in wealth accumulation and disciplined financial management,” the study said.
The survey also found that Filipinos were effective savers, with 46 percent of investors with target saving amount starting to save early or before the age of 30.
“This may explain why an overwhelming majority of investors [91 percent] claim they will have sufficient savings to meet their financial needs in five years time,” Manulife said.
Those who have set a target saving amount, or about 74 percent expect to meet their goal in one to four years, which could indicate that Filipino investors are setting short term targets, Manulife said.