Financial savvy of PH youth

Amid depressing news about the spread of the Delta variant of COVID-19, a national debt of P1.166 trillion (and counting) and improper political posturing ahead of the 2022 elections, there is good news about Filipino millennials (aged 25-40) and Generation Z (aged 15-24).

According to a survey conducted by international insurance company Manulife between April and May 2021, these generations have “expressed heightened financial and mental health challenges, prompting them to take more proactive steps toward achieving financial security and personal wellness.”

The report further states that while they “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 security. 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.”

These findings are far off from the perception by some quarters that those Filipinos tend to live only for the present or are oblivious to things happening around them unless these directly affect their interests.

Apparently, the pandemic has made them concerned about “running out of money, getting sick, losing their lives or their loved ones, declining mental health, and drowning in debt.”

With the massive loss of employment opportunities caused by the lockdowns imposed by the government, the survey respondents may have realized the need to be more judicious in the management of their finances.

Thus, they have to minimize their expenses on activities that give short-term enjoyment, e.g., indulging in cellphone and fashion trends or being seen in places that give the impression of financial success to their clientele, and instead setting aside funds for future contingencies.

This change in attitude is evident in the survey’s findings that, among others, 79 percent of millennials have insurance coverage, 78 percent have subscribed to government savings programs, 38 percent have invested in mutual funds and 29 percent own unit investment trust funds.

These statistics show a high level of financial literacy among Filipinos in those age groups. It is a development that should elate the Bangko Sentral ng Pilipinas, which has been engaged for years in a campaign to make more Filipinos financial savvy.

This may sound cruel, but the pandemic may be credited for something positive. i.e., it engendered on the two most productive ages of Filipinos the idea that, this early, they have to set aside a portion of their income for investment in financial instruments they can quickly draw on for emergencies in the future.

These findings should be food for thought for banks and financial institutions to figure out ways and means to meet the youth’s expectations or plans for financial stability.

The existing menu of financial investments may be described as “vanilla type” or traditional as they have been in place for decades.

Although they have proven their worth, millennials and Gen Z may want to explore other forms of investments that are attuned to, among others, possible income fluctuations, capacity for risks and the periods of availment of the proceeds of the investments.

Bear in mind also that this potential clientele has been nurtured in a world where digital technology has made it a lot easier for people to communicate with each other, buy or sell goods in the comfort of their homes, or engage in financial transactions from cellphones or laptops.

The same technology, however, has been used by unscrupulous parties to engage in scams, fraudulent commercial activities and other forms of cybercrime that have victimized thousands of Filipinos.

Thus, the challenge to businesses that want to ride on or benefit from that increase in financial literacy of the two Filipino age groups is to come up with new financial products that can be safely and confidently be accessed or maintained through digital technology. INQFor comments, please send your email to [email protected].