Financial Literacy in the Philippines: Scope, Statistics, Tips 2024 - The Thrifty Pinay

Financial literacy is arguably one of the most vital yet passively recognized concepts in the Philippines. 

Want an experiment? Ask any random Filipino professional regarding financial literacy and they’ll have a sort of intellectual grasp on the subject. Proceed by respectfully investigating how well they manage their finances, and you might find an inconsistency. The real-world application of financial understanding seems amiss among Filipinos.

The statement above, as harsh as it sounds, is not meant to throw flak at our kababayans, but an illustration of the financial reality in the Philippines. Statistics and research studies will tell us that Filipinos are one of the most financially uneducated people across the globe.

And that’s a big problem bound to be massive if left unmanaged. So in this article, we’ll look at financial literacy in the Philippines and provide actionable personal finance tips to help you better manage your finances. Let’s explore the following:

  • What is Financial Literacy?
  • Statistics on Financial Literacy in the Philippines
  • Financial Literacy of Young Professionals in the Philippines
  • Best Financial Literacy Programs in the Philippines
  • Financial Literacy Month in the Philippines
  • Financial Literacy Law in the Philippines
  • Sound personal finance tips that you can easily apply in your life

What is Financial Literacy?

Before we get down to business, let’s redefine financial literacy.

Investopedia defines financial literacy as the ability to understand and use financial skills effectively. These finance skills include the following: budgeting, saving, investing, and accounting. Financial literacy allows people to make educated decisions regarding financial management.

Looking at the brief definition, we can extract two important prerequisite domains to call oneself financially literate:

  1. “Understanding” (referring to the knowledge of essential financial skills)
  2. “Use” (referring to the application of said financial skills)

Both are needed for financial literacy. Unfortunately, many Filipinos tend to have a limited understanding of financial skills, which negatively impacts their financial health. Let’s take a close look at some statistics on financial literacy in the Philippines.

Statistics on Financial Literacy in the Philippines

With the current economic state faced by the world, financial literacy is more crucial than ever. And the absence of such understanding may predispose people to potentially irreparable financial disasters. Such is the case for 3 in 4 people in the Philippines.

According to the study of the Global Financial Literacy Excellence Center, the Philippines is one of the countries with the poorest level of financial education. They found that only 25% of the population are financially literate adults. While the Philippines are not the worst performer around the globe, we certainly lag behind other ASEAN countries like Singapore, Malaysia, Indonesia, and Thailand.

Meanwhile, countries in the Scandinavian Peninsula, particularly Denmark, Norway, and Sweden, garnered the top spot with 7 out of 10 adults being financially literate. Yemen was reported with the least financial literacy among adults with only 13%. Moreover… 

Financial Literacy of Young Professionals in the Philippines

Dr. Jose P. Rizal, the country’s national hero, is famous for many things. One of which is his immortalized adage, “Ang kabataan ang pag-asa ng ating bayan,” which means the youth will be the pillars that shape the Philippines’ society, including its economic future.

As young professionals step into the workforce, armed with their education and ambitions, they carry the burden of ensuring not only their own financial well-being but also contributing to the overall economic growth of the country.

Financial literacy will play a crucial role in the fulfillment of this vision. The question is: are young professionals in the Philippines financially literate?

A 2020 study, carried out by three researchers from the Polytechnic University of the Philippines, examined the answer to this question. level of financial literacy among young Filipino professionals (both male and female, 20-35 years old, Quezon City residents).

The researchers found a significant correlation (not causation) between financial knowledge and financial behavior. In other words, knowledge of financial skills does not always translate to good financial behavior. Financial attitude, or a person’s long-term financial goals, plays a crucial role in bridging knowledge and behavior.

According to the study, only 35% of the respondents understood financial wellness or effective money habits to achieve financial security and stability. A lack thereof results in poor financial management.

When asked about loans, the participants admitted to facing challenges regarding the subject, with 28% dealing with personal loans, 46% facing credit card borrowings, and 53% facing financial distress due to living beyond their means as a result of a lack of self-discipline.

Based on the study’s results, the researchers emphasized that “exposure and experience with financial education programs” is a huge factor in financial education. They concluded the research by leaving their professional recommendations on how to boost financial literacy in the Philippines:

  • Financial education begins at home: Youth best learn financial literacy when they acquire this information from parents, not financial experts and institutional advisors. However, not all parental advice on finances may be applicable today. It’s important to verify the applicability of advice through extensive research.
  • Financial education must be taught in school: The study placed an interest in the importance of integrating financial education into the curriculum of schools, colleges, and universities.

Fortunately, the Department of Education has implemented DepEd Order No. 022, Series of 2021 to improve financial literacy among young learners. It aimed to integrate financial concepts into learning areas to educate learners and personnel alike on financial literacy.

Good for the students, right? But how about out-of-school adults who struggle with financial management? Financial literacy programs might help them.

Financial Literacy Programs

The abovementioned study emphasized the role of parents in educating their children on financial literacy. Unfortunately, not all parents are equipped with financial literacy skills to pass on. This poses a dilemma that young Filipinos may repeat the cycle of poor financial management without proper guidance at home.

This is where financial literacy programs come in. With adequate financial literacy, Filipinos can be empowered to live financially healthy lives. BSP Deputy Governor Bernadette Romulo-Puyat described being financially healthy as the capacity to:

  • Meet the financial obligations
  • Resist financial shocks
  • Achieve financial goals
  • Attain financial control and security

Financial literacy programs work to help adults reach that state.

Best Financial Literacy Programs in the Philippines

In the Philippines, several organizations and initiatives aim to promote financial literacy among individuals of all ages. Here are some notable ones:

  1. Bangko Sentral ng Pilipinas (BSP) Financial Education Advocacy: The BSP, the central bank of the Philippines, actively promotes financial literacy through various programs and initiatives. They offer resources for both educators and consumers, including teaching guides, toolkits, and interactive materials.
  2. The Thrifty Pinay: Of course, why wouldn’t I include my own programs? TTP started in 2018 and as a BS Accountancy graduate, keynote speaker, author, and writer, I’ve conducted numerous speaking engagements revolving around topics such as budgeting, investing, psychology of money, women empowerment, motivation, goal-setting, and so much more. Have a look at our list of seminars.
  3. Ateneo de Manila University’s Center for Personal Finance: Ateneo’s Center for Personal Finance offers workshops, seminars, and online courses designed to improve financial literacy among Filipinos. They cover topics such as budgeting, investing, debt management, and retirement planning.
  4. UP National College of Public Administration and Governance’s Institute of Public Governance: The Institute of Public Governance conducts research and advocacy on financial literacy in the Philippines. They offer training programs and workshops for government agencies, NGOs, and other organizations interested in promoting financial literacy.
  5. RFP Institute’s Registered Financial Planner Program: The Registered Financial Planner (RFP) program is one course I recommend enrolling at if you want to take financial planning seriously (read my honest review here). It is offered by the RFP Institute and provides comprehensive training on financial planning and investment management. It aims to produce certified financial planners who can help improve financial literacy and promote sound financial decision-making in the Philippines.
  6. Philippine Securities and Exchange Commission (SEC): The SEC provides educational materials and resources on investing, securities regulation, and investor protection. They offer investor education seminars and workshops to help Filipinos understand the basics of investing and make informed investment decisions.

These organizations and initiatives play a crucial role in promoting financial literacy and empowering individuals to make sound financial decisions in the Philippines. Whether through government agencies, financial institutions, or educational institutions, efforts to enhance financial literacy are vital for the economic well-being of us Filipinos.

More Financial Literacy Programs for Filipinos

Financial Literacy Law in the Philippines

The Philippines government is taking strides toward helping Filipinos achieve financial literacy, and for good reason!

Republic Act 10922 (a Finanicial Literacy Law in the Philippines), otherwise known as the Economic and Financial Literacy Act, is a Philippine law that aims to promote financial awareness among its citizens. 

Financial Literacy Month in the Philippines

Under the law mentioned above, every second week of November is declared as Economic and Financial Literacy Week, wherein the National Economic and Development Authority (NEDA) conducts activities to promote financial literacy among Filipinos.

Just last November 2023, NEDA spearheaded the celebration with the theme, “Bayanihanomics: Sama-samang Pakikilahok para sa Matibay na Ekonomiya.” 

Other government agencies and government-owned and controlled corporations are also mandated by RA 10922 to conduct programs that raise awareness and develop national consciousness on financial matters. 

Be on the lookout for financial literacy programs by following the social media pages of NEDA and other government agencies.

Aside from the above, even private institutions and finance influencers join the national initiative to attain financial literacy. 

For instance, the Prudence Foundation has launched its “Cha-Ching” Program, which aims to educate young schoolers on how to manage finances. On the other hand, one of Sun Life Foundation’s flagship programs, “Pera-aralan,” targets public school teachers to help them develop positive money habits.

The Thrifty Pinay also joins in the campaign to develop financial literacy in the Philippines. For years now, with the grace of God, I have been actively invited by companies like Grab, JPMorgan Chase, VISA, government and private organizations, to talk about financial management. Check out my speaking engagement excerpts here.

To book TTP for a webinar on personal finance, click here.

Personal Finance Tips in the Philippines

If you want to take baby steps toward financial literacy, here are some tips to help you out:

  1. Embrace the “gulayan” mentality:  Historically, Filipinos were known to grow their vegetables in a “gulayan” or vegetable garden. In the same manner, you may cultivate a financial literacy habit little by little starting with your savings. Start small and set achievable goals. You can use a budgeting method like the 50/30/20 rule (allocate 50% for needs, 30% for wants, and 20% for savings/debt repayment).
  1. Use your diskarte instincts: Be resourceful! Filipinos are known for their “diskarte” or resourcefulness. Look inward and explore ways to save on everyday expenses. For instance, can you walk instead of taking public transportation from time to time? Can you cook more meals at home instead of eating out? These micro-expenses can be a huge sum when heaped.
  1. Think long-term: Invest in your Future. Don’t let your hard-earned money just sit idle. Explore investment options like Pag-IBIG or SSS, which offer benefits and long-term growth. Moreover, you can talk to a financial advisor to learn more about investment options that fit your risk tolerance and goals.
  1. Know the difference between needs and wants: Filipinos value family and celebrations. It’s totally fine to spend on what brings you joy but learn to prioritize basic needs like food, shelter, and utilities first. Budgeting will help you identify areas where you can cut back on unnecessary spending.
  1. Make financial literacy a family affair: Financial literacy begins in the family. Talking openly about money not only builds financial consciousness but also forges deeper bonds with family members. Try to get your kids involved in budgeting and saving discussions. Also, teach your children the value of money, so they can develop responsible spending habits.

Remember: Financial literacy is not an overnight success. 

It takes discipline and dedication to become financially responsible. But there is a silver lining to keeping your belt tight and curling your legs up when the blanket is short. All those efforts and sacrifices of missing out will pay off once you see the fruits of proper financial management! 

If you’re interested in booking TTP for financial literacy talks during your webinar or event, click here.

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By Ameena Rey-Franc

Recognized as one of the Top Finance Blogs in the PH. Ameena Rey-Franc (founder of TTP) is a former Banker and BS Accountancy graduate turned Blogger, Keynote Speaker, and entrepreneur. Currently an RFP delegate, she is also the Author of a book about Financial Resilience and has held seminars for reputable companies like GrabFoodPH, Pru Life UK, VISA, JPMorgan Chase& Co., Paypal, Fundline, Moneymax, and many more. The Thrifty Pinay's mission is to empower women to LEARN, EARN, and be FINANCIALLY-INDEPENDENT no matter what life stage they are in.