Recently, the pandemic has caused many Filipinos to be careful with their personal finances. However, the state of financial literacy in the country is still of immense concern. The 2015 World Bank (WB) Survey and the 2019 Central Bank Financial Inclusion Survey found that only half of Filipino adults answered financial literacy questions correctly.
This was backed up by a Home Credit survey where only 10% of respondents correctly answered questions that test their knowledge of various financial concepts.
Said survey was taken from the consumer credit company’s self-designed financial literacy quiz found in the My Home Credit app. A two-part quiz, it offers users a chance to answer a series of questions focusing on personal finances and other elements of financial literacy.
For an in-depth analysis of the quiz results, here is a breakdown of the results for each question:
Findings from Quiz 1: Basics of budgeting, digital literacy and cybersecurity
Over 25,000 respondents took the first quiz which covers topics on budgeting basics, digital literacy and cybersecurity. From May to December 2021, the respondents mainly belong to the age group of 25-39 years and 63% or the majority are women.
According to the results, only 10% got all the six questions correct. Asked about managing finances, almost half (up to 10,000) did not apply the ideal savings formula in their monthly budget; they prioritize expenses first and save what’s left.
Regarding interest calculation, 57% got the answer right and the remaining half got the calculation wrong or don’t know how to answer. On a related question on inflation, respondents were asked about the impact of inflation and only 41.8% had a good understanding of its effects on their purchasing power and borrowing decisions.
Filipinos seemed to be more knowledgeable about investments and risk diversification. When asked if they were going to spread their money over several investments or concentrate on just one, almost 73% chose to put it in several investments to limit their losses, 22.5% for one investment and 4, 6% don’t know the answer.
Along with inflation and basic numeracy concepts, cybersecurity and security are also among the concepts that are not well understood by takers with only 43.4% getting the answer right – a number slightly lower than 47.8. % before the covered period.
|Questions (Category)||Percentage of correct answers (May – September 2021)|
|Cybersecurity and safety||43.4%|
On the other hand, most respondents answered the question about tasks that can be done using digital financial tools at 97%. The social distancing measures brought by the pandemic could be a huge factor in getting Filipinos up to speed in using fintech tools for day-to-day transactions.
In summary, the results show that respondents’ knowledge of all the financial literacy concepts mentioned above is at the intermediate level with scores below 3 to 4 out of 6. Basic numeracy, inflation, cybersecurity and safety are the least understood concepts as indicated in the survey.
Quiz 2 Conclusions: The Basics of Budgeting, Saving and Borrowing
The second part of the financial literacy quiz focused on the basics: budgeting, saving, and borrowing. Launched in September, it covers the launch period to September, there are over 19,000 responses, with more women trying to answer the quiz and in the 25-39 age bracket.
The first three questions were about how to properly plan a monthly budget and how to calculate an emergency fund. Most quiz participants (66.8%) know that each month they should at least make a budget plan and 88.4% know that the ideal amount of emergency fund should cover 3-6 months of expenses. However, only ¼ of users know how to set a SMART financial goal.
When it comes to borrowing basics, almost all (95%) of quiz takers know that paying bills on time each month can help improve their credit score. A total of 77.1% also answered that a consumer finance company is an institution that could help them obtain loans in cash or on products.
On the same subject of applying for a loan, 83% know the concept of loan repayment, but only half of the respondents know what a cooling-off period is in a loan; 65% know there are different ways to help them get their loans approved (like preparing requirements in advance, borrowing what you can afford, etc.).
Looking at the results of the second quiz, the majority of Filipinos have a good understanding of the basics of certain financial concepts, but would need guidance in understanding more specific terms. Regardless, the results of the second quiz show that the level of financial literacy in the country is promising and would continue to improve if taught properly.
This is where companies that champion financial literacy come in. One of them is Home Credit Philippines, a long-time financial provider and financial educator in global and domestic markets. Through Wais sa Home, their financial and digital literacy program, they are addressing the concerns revealed in the survey through various initiatives and activities aimed at fostering financial inclusion and raising financial literacy standards among Filipinos.
“Our business model and the focus of our corporate social responsibility efforts are centered on responsible lending. We want to help create responsible borrowers and good payers through financial education and digital financial literacysays Sheila Paul, Marketing Director of Home Credit Philippines.
To reach a wider audience and have a stable source of important concepts in financial and digital literacy, Home Credit is soon launching its Wais sa Home website to enable more people to gain knowledge about money management. basic money and digital skills.