Only 1 Out of 10 Filipinos Make an Effort to Save
In a survey conducted by the Citibank in December 2007, it was revealed that only 1 out of 10 Filipinos make an effort to save. The study also revealed that an average Filipino savings will only last about nine weeks once they lose their jobs or any other unforseen circumstances which may prevent them from having a steady income.
The Idea of Saving for Filipinos
Filipinos have a different idea of saving. Way too different from the Americans and Chinese. Whenever we’re able to get a discount from a product or service, it’s already saving. While it may be one of the forms of being able to save a few bucks, we usually just stop there. For us, it’s the idea of being able to save those few cents for another item or another product. We like the idea of getting discounts but saving for our retirement or for the long term seem to be far out.
We grew up in the environment where saving is not trending. Parents may teach us to look for the best deals to be able to save a few cents but not the actual financial literacy which could help us in the long run. We were trained to be contented with what we have and which is why we find it difficult to plan or get ready for the future. Emergency funds don’t exist to most Filipino families lives.
Why Most Filipinos Don’t Save and Build Wealth?
There are several obstacles as to why Filipinos do not or cannot save money. Identifying and understanding them will help us to overcome them and eventually learn the importance of saving.
1. Low Financial Literacy
One of the most common and notorious stumbling block to saving is the lack of financial literacy. While many Filipinos may be capable of saving, most of us just don’t know how to get started. Thus, we are not able to apply strategies for saving effectively or identify investment opportunities. Due to financial illiteracy, most Filipinos often fall into the trap of investment and other financial scams which could not only harm one’s financial status but may even ruin one’s life.
To combat this, we need to educate ourselves by reading books, surf the internet, attend seminars to learn more about saving, money management and other investing strategies. While most parents invest heavily in sending their kids to school, it is also important to teach their kids the importance of saving and giving them financial literacy which is more important in the long run.
2. Lack of Income
Let’s face it, the lack of income dissuades us to save money. In the latest survey by the International Monetary Fund published on September 12, 2011, the gap between the rich and the poor continues to widen. The graph below, based on data of 2005, shows that the richest 1% of the people in the world receive nearly 14% of the global income while the poorest 20% receive just over 1%. In short, many Filipinos families are living within or even below the poverty line.
While most Filipinos may be having a hard time to make both ends meet, the situation should not deter us from saving even we need to start little by little. Saving does not have to be grand, it just needs to be consistent.
It’s not always how much money we make, it’s how much money we’re able to save.
3. Poor Spending Habits
Everyone has a shopping monster within us but that doesn’t mean we always need to give in to the idea of buying what we want. We need to identify our needs from wants and prioritize the former than the latter instead of the other way around. My frugal mom taught me of being contented with what we have so when I had my own job, I started to crave for new things like buying new bags and shoes even if I’ve only wore the previous purchase once or twice.
Some people even have the ‘one-day-millionaire’ attitude wherein they work hard just to blow all their earnings to a single luxury they could barely afford and when they still couldn’t, they would just settle for loans. Others even plan to spend what they’re yet to earn thinking that they may not be around tomorrow so they need to enjoy the things they want today.
Sometimes we even save to spend the next month. I remember when I was a kid, me and my friends would save all of our Christmas gifts (which mostly are money) so we could buy toys by January.
What sets the wealthy people from the poor ones is not how much money they make but how they manage their income. Below are just some of the interesting differences in the mindset of the rich people vs. the poor people.
4. Let it Be or “Bahala Na”
Filipinos are very faithful to the point that we over-use our faithfulness. We hope that God will save us from saving money and that our needs will be met once we’re not able to do it on our own. The idea that God has compassion for those who need is different from trying to rely everything to Him without us even trying to be self-reliant. People don’t get rich by accident and just relying to the Deity (while it’s important that we trust in the Lord too), it’s essential that we do our part when trying to build our wealth.
5. It Doesn’t Apply to Me
We see people getting rich and we love the idea of rugs to riches but we often tell ourselves it doesn’t apply to us. The other day I was studying Dave Ramseys’ Financial Peace University materials sent to me by Brad of EnemyofDebt. There were several financial terminologies which I don’t understand and situations which I think don’t apply to me. Sometimes when we see something that we think don’t apply to us, we stop learning more about it. Filipinos have a habit of selectively choosing principles and rules which are only convenient to us. We all want to get rich but not everyone is willing to take the risk and face all the necessary challenges.
Those are just some of the several obstacles that prevents us from saving money and building our wealth. We need to identify which ones are we currently facing so we could better understand them in order for us to get past them.
Which among the obstacles mentioned are you having a hard time? Share with us through the comments below so we could learn from how others have overcome it.