The most common problem of some Filipinos are being financially illiterate. But first, what is financial literacy and what is its importance? Financial literacy is having a knowledge about how a person should manage their own money or how they budget their money. According to the standard & poor rating services survey that 25% of the Filipino adults are financially literate and the 75% are not. But people need to acquire financial literacy in order to sustain a good financial life. This is when we realize that financial literacy is very needed in the Philippines.
There is a big difference between being financially literate and being not. People having knowledge about financial literacy can help people manage their money wisely and live a frugal life. A very good example for this is by knowing how to make a savings account and depositing to the bank. This can make the money more secure and it increases monthly depending on the interest rates. Another factor that the bank offers would be that you can ask for a loan from them.
So if the man needed extra money for his children’s education, he can loan from a bank and pay back monthly. But of course, before owing to a bank, the bank will ask much information about the monthly salary, the work of their parents and much more. If the borrower is qualified for loaning money, the bank will lend the money. If the borrower is not qualified then the bank will not lend. So if you are finally qualified, here comes the word responsibility.
People can owe money to the bank as long as they can pay them on time. And if you don’t, you will be in a lot of trouble by facing many legal actions. Another would be getting insurance.
Insurance could help you pay for something that’s damaged or if something happens, there would be money given to your family members. It would be like an emergency fund. Some Filipinos do not get rich and have sufficient money for their needs because they lack knowledge about financial management. Some Filipinos spend their money more on their wants than their needs. For example, they need to pay the rent for their house but instead, they bought a new phone although they already had one. Another example would be that some Filipinos do not know how banking works, so some people are doing “5-6” because no one teaches them how to borrow money from the bank.
“5-6” is when someone borrows 5 pesos, then if they will pay back the lender they needed to pay 6 pesos or it gives 20% interest. Sometimes people cannot borrow from the banks because they have many debts that have not been paid simply because they do not know how to manage their money well. So to wrap it up, financial literacy must be known by the Filipinos to have a stable financial life. The causes of poverty of the Filipinos can be solved or lessened if all the Filipinos have this kind of knowledge. Being educated would greatly help us for our future and the future of the economy.