In Numbers: The Money Habits of Filipinos

By Randell Tiongson on October 28th, 2015



45% – that’s the grade Filipinos received when they were asked to take a financial literacy quiz. The results were reported in a World Bank study entitled ‘Enhancing Financial Capability and Inclusion in the Philippines’. Part of the study is statistics on financial management and knowledge habits of Filipinos. On average, the adults surveyed were only able to answer 3.2 out of 7 questions correctly.

Another cause of concern is 41% of Filipinos do not use any formal or commercial financial products. You’d think that a savings account is the most obvious way to store money.

Numerous reasons were cited as to why they haven’t used any financial product, the most common being lack of money. Because of insufficient funds, not only are Filipinos unable to open a basic bank account, but 55% of the respondents report being unable to pay for basic necessities.

For households earning Php 10,000 a month, that is believable. The average size of a Filipino family is five members per household according to the Philippines Statistics Authority (PSA). What is surprising is even for households earning about Php 50,000, 64% say that lack of income is the reason for not having enough money for basic necessities (compared to 62% of those earning only Php 10,000 a month).

The information can be a brain-twister. How is it possible to still have insufficient funds with much greater income? The answer is Filipinos’ lack of inclination to save, budget, and monitor expenses. Only 38% of the respondents monitor their expenses; however, data analysis shows that those who plan and monitor their expenses are more likely to have funds left over. This shows that whether you live on Php 10,000 or Php 50,000 a month, monitoring your expenses is essential to avoid overspending.

A Failing Grade

With a 45% grade, Filipinos fail at answering basic personal finance questions. From understanding compounding interest to comparing bargains, here are the top 3 finance-related questions Filipinos failed at:


  1. Impact of inflation on prices and compound interest

Inflation and compound interest are the same in principle but work in opposite directions. Inflation increases the value of prices, while compound interest increases the value of our assets. Inflation works against us, compound interest (when it comes to investments) works for us. In the World Bank study, 69% of respondents answered inflation-related questions incorrectly, while 68% answered compound interest related questions incorrectly.


  1. Stock risk diversification

For this section, 68% of Filipinos answered incorrectly, saying that it is safer to buy stocks of just one company instead of buying stocks from a variety of companies.

A majority of the respondents don’t understand the importance of diversification and how it minimizes risk. They are scared to put their money in risky and non-guaranteed investments. However, if Filipinos understand diversification, and how it minimizes risk, they would be more willing to invest.

  1. Compare and bargain

Below is a question used in the study measuring the respondent’s ability to compare and bargain prices:

Let’s assume that you saw a TV-set of the same model on sales in two different shops. The initial retail price of it was Php 1,000. One shop offered a discount of Php 150, while the other one offered a 10% discount. Which one is a better bargain, a discount of Php 150 or 10%?

 *taken from ‘Enhancing Financial Capability and Inclusion in the Philippines – A Demand-side Assessment’, World Bank (July 2015)

For this question, only 31% of the respondents answered correctly! Knowing basic computations and comparing bargains can make or break your budget. A Php 50 increase in discount may not seem much for a one-time buy like a TV set, but the ability to compare and bargain may prove more essential for regular buys such as clothes, food, and others. And any money you save can add up to a lot.

A Financially Literate Philippines

The root of financial management is basic education on personal finance and practicing what you learn. To educate yourself on the basics such as the effects of inflation and compound interest, read online resources and blogs to get a better understanding. For comparing bargains and finding good deals, if you’re nervous of practicing your negotiating skills with a real person, you can start with financial comparison platforms such as where you can compare prices on car insurance, credit cards, and personal loans.

My hope is for a financially free Philippines, but for that to happen, Filipinos would have to become more financially literate. Thankfully, there are many resources out there for you to learn and serve as a guide on proper financial management. Hopefully in the future, all Filipinos won’t only pass the financial literacy quiz but live financially free lives as well. The best time to start learning is today.



4 thoughts on “In Numbers: The Money Habits of Filipinos”

  • Although I agree, I have thoughts about the survey itself. It would be interesting to note how Filipinos understand basic financial terms, do we have equivalent or different understanding of these foreign words? How do we operate or work out our finances? It would surely give us a complete picture when we understand how the right stuff are done in the Filipino way.

  • Randell thank you for extending your financial freedom advocacy to a lot of Filipinos thru the net! May many others follow your example of helping and educating people on financial literacy.

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In Numbers: The Money Habits of Filipinos