The pandemic pushed many Filipinos to be mindful of their personal finances. However, there’s still immense concern on the state of financial literacy in the country.
Both the 2015 World Bank (WB) survey and Central Bank’s 2019 financial inclusion survey revealed that only half of Filipino adults correctly answered financial literacy questions.
This was supported by a survey from Home Credit where only 10% of the respondents correctly answered questions that test their knowledge on various financial concepts.
The said survey was drawn from the consumer finance company’s self-crafted financial literacy quiz found in the My Home Credit App.
A two-part quiz, it offers users a chance to answer a series of questions involving personal finance and other financial literacy items.
To get an in-depth analysis of the quiz results, here’s a breakdown of the findings for each question:
Findings of Quiz 1: Basics of Budgeting, Digital Literacy, and Cybersecurity
More than 25,000 respondents took the first quiz that covers topics on basics of budgeting, digital literacy, and cybersecurity. Within May to December 2021, the respondents mostly belong to the age group of 25-39 years old and 63% or majority are female.
From the results, only 10% got all correct answers from the six questions. When asked about managing finances, almost half (as many as 10,000) did not apply the ideal saving formula in their monthly budget; they prioritize expenses first and save what is left.
On interest computation, 57% got the correct answer and the remaining half either got the wrong computation or does not know how to answer. On a related question about inflation, respondents were asked about the impact of inflation and only 41.8% had the right understanding of its effects on their purchasing power and borrowing decisions.
Filipinos seemed to be more knowledgeable on investments and risk diversification. When asked whether they will spread their money to multiple investments or focus on just one, almost 73% chose to put it into multiple investments to limit their losses, 22.5% for one investment and 4.6% do not know the answer.
Aside from inflation and basic numeracy concepts, cybersecurity and safety are also one of the concepts that are not well-understood by the takers with only 43.4% getting the correct answer—a number slightly lower than 47.8% before the covered period.
On the flip side, most respondents aced the question on what tasks can be done using digital financial tools at 97%. The social distancing measures brought by the pandemic might be a huge factor on how well-versed Filipinos have become in using fintech tools for daily transactions.
In summary, results show that the respondents’ knowledge on all financial literacy concepts mentioned above are in the intermediate level with scores falling under 3 to 4 out of 6. Basic numeracy, inflation, cybersecurity, and safety are the least understood concepts as indicated in the survey.
Findings of Quiz 2: The Basics of Budgeting, Saving, and Borrowing
The second leg of the financial literacy quiz zoomed in on the basics: budgeting, saving, and borrowing. Launched in September, it covers the period of launch until September., there are over 19,000 responses, with more females attempting to take the quiz and from the age group of 25-39 years old.
The first three questions concentrated on how to properly plan a monthly budget and how to compute for an emergency fund. Most quiz takers (66.8%) know that every month, they should at least make a budget plan and 88.4% know that the ideal amount of emergency fund should cover 3 to 6 months’ worth of expenses. However, only ¼ of users know how to set a SMART Financial goal.
Regarding the basics of borrowing, almost all (95%) of quiz takers know that paying bills on time every month can help improve their credit score. A total of 77.1% also answered that a consumer finance company is an institution that could help them avail cash or product loans.
On the similar topic of loan application, 83% knows the concept of loan repayment but only half of respondents know what a cooling off period in a loan is about; 65% knows that there are different ways that could help them approve their loans (such as preparing requirements ahead of time, borrowing an amount that you can pay, etc).
Looking at the findings of the second quiz, majority of Filipinos have a proper understanding of the basics of some financial concepts but would need guidance on comprehending more specific terms. Regardless, the results of the second quiz show that the level of financial literacy in the country is promising and would continue to improve if taught properly.
This is where companies advocating for financial literacy come in. One of which is Home Credit Philippines, a longtime financial provider and financial educator both in global and domestic markets. Through Wais sa Home, their financial and digital literacy program, they address the concerns revealed in the survey through various initiatives and activities aimed at driving financial inclusion and raising financial literacy standards amongst Filipinos.
“Our business model and the focal point of our corporate social responsibility efforts is centered on responsible lending. We want to help create responsible borrowers and good payers through financial education and digital financial literacy,” says Home Credit Philippines Chief Marketing Officer Sheila Paul.
To reach a wider audience and have a steady source of important financial and digital literacy concepts, Home Credit is launching its Wais sa Home website soon to allow more people to gain knowledge on basic money management and digital skills.