Sunday, October 21, 2018
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Filipinos as money ‘experts’: Clueless on bonds, stocks, loans

MANILA, Philippines—One 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 Canada’s 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.


The 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 enough 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 one’s savings in a bank account remains prevalent and such an approach reveals how Filipinos prepare or underprepare for tomorrow. One’s money is intact in a bank account but with so little growth, or even negative real growth, there is doubt if it can ensure one’s financial security,” the report said.


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 Life’s 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.


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 above

e. 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?

a. P2

b. P20

c. P2,000

d. P20,000

4. Which of the following can be considered an asset?

a. Cash

b. Credit

c. Utility bills

d. All of the above

e. None of the above

5. Which of the following can be considered a debt?

a. Insurance

b. Loan

c. Real estate

d. All of the above

e. None of the above

6. Which of the following can be considered an investment?

a. Stocks

b. Taxes

c. Revenue

d. All of the above

e. None of the above

Answers: 1) d; 2) b; 3)c; 4)a; 5)b; and 6)a

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TAGS: Money Matters, Personal finance, Philippines, Sun Life of Canada
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