Younger Filipinos future-proofing their finances

The younger generations of Filipinos have become more conscious on saving, budgeting and investing for the future as they deal with financial and mental challenges caused by the prolonged COVID-19 pandemic.

This is according to insurance giant Manulife’s research “Know Your Ys and Zs: A closer look at the financial and mental well-being of Filipino Millennials and Generation Z in the time of COVID-19,” which surveyed 500 respondents across the Philippines in April and May this year.

With the pandemic having dragged the local economy to its worst recession in history, 81 percent of respondents said they were taking the necessary steps to financially secure their future, and 77 percent were prioritizing spending on essential items or services.

Furthermore, 82 percent said they didn’t want to incur debt or take loans they could not pay. Only 19 percent were saving money with the intent to spend on luxuries.

Millennials refer to young adults born between 1981 and 1996, thus aged 25 to 40, while GenZ refers to the generation born between 1997 and 2012, or within the nine to 24 age bracket.

70% of population

Manulife’s study focused on these two generations as they make up 70 percent of the local populace.

“The far-reaching consequences of the pandemic on public health, personal relationships and the global economy have made the younger generations of Filipinos more aware of the importance of their physical, mental and financial health, and how interconnected these are to achieving optimum well-being,” Melissa Henson, Manulife chief marketing officer, said in a press briefing on Wednesday.

Different goals, priorities

“While Millennials and GenZs may have different priorities and goals, depending on where they are in their life journey, what is common is that the challenges brought by COVID-19 have accelerated their desire for financial stability. They are now seeking more products and services that not only align with their beliefs and interests, but will also help them secure a more stable future,” she added.

The survey showed that Millennials and GenZs felt they had limited funds and limited job opportunities during the pandemic. For those who have an income stream, 82 percent save money every pay period or every month, 75 percent follow a monthly budget and 87 percent avoid going over budget. However, while they claim that at least 25 percent of their monthly income goes to savings—and they stick to a budget conscientiously—in reality, they are only able to save about 10 percent.

Within the millennial cohort, 67 percent of respondents have started investing in financial instruments, 79 percent are looking for ways to grow their money and 77 percent are looking to diversify their portfolios to mitigate risks.

Meanwhile, GenZs are actively educating themselves about finance, recognizing that they are not yet financially stable amid the COVID-19 situation.

As they pursue ways to achieve financial security, though, GenZs have been quite ahead of the preceding generation. On average, GenZs start saving money at 17 years old and investing at 21, while millennials only began saving at age 23 and investing at 27.

While both Millennials and GenZ generations own financial products, millennials’ approach to investment is more accepting of risk, while acknowledging the need for protection. Seventy-nine percent of millennials own insurance, 78 percent subscribe to government savings programs, 45 percent own accident insurance, and 38 percent have mutual funds.

Most millennial respondents (60 percent) are into cryptocurrencies, while more than 40 percent also own pension and retirement products, while 29 percent have unit investment trust funds (UITFs).

About 68 percent of GenZs have insurance plans, 38 percent have accident plans, while 50 percent have enlisted for government savings programs. On investments, 40 percent of them are into cryptocurrencies, 33 percent are into mutual funds and 21 percent are into UITFs.

The survey also showed that mental health issues were affecting working gen Z and millennials, mainly due to worries about debt and the possibility of job loss.

To look after their mental well-being, Gen Zs’ top-ranked activities include getting enough sleep (84 percent), enjoying a proper meal (76 percent), talking to friends and family (74 percent), making time for hobbies (74 percent), and being active through fitness activities and exercise (62 percent).