A survey conducted by consumer finance company Home Credit showed the financial literacy in the Philippines needs more push.
The two-part self-crafted financial literacy quiz found in the My Home Credit App showed only 10 percent of the respondents correctly answered questions that test their knowledge on various financial concepts.
More than 25,000 respondents took the first quiz from May to December 2021.
Results show the respondents’ knowledge on basics of budgeting, digital literacy, and cybersecurity are in the intermediate level with scores falling under 3 to 4 out of 6. Basic numeracy, inflation, and cybersecurity and safety are the least understood concepts as indicated in the survey.
Only 10 percent got all correct answers from the six questions. When asked about managing finances, almost half (as many as 10,000) did not apply the ideal saving formula in their monthly budget; they prioritize expenses first and save what is left.
On interest computation, 57 percent got the correct answer and the remaining half either got the wrong computation or does not know how to answer. On a related question about inflation, respondents were asked about the impact of inflation and only 41.8 percent had the right understanding of its effects on their purchasing power and borrowing decisions.
Filipinos seem to be more knowledgeable on investments and risk diversification. When asked whether they will spread their money to multiple investments or focus on just one, almost 73 percent chose to put it into multiple investments to limit their losses, 22.5 percent for one investment and 4.6 percent do not know the answer.
Most respondents aced the question on what tasks can be done using digital financial tools at 97 percent.
The second leg of the financial literacy quiz launched in September had over 19,000 responses.
Majority of Filipinos have a proper understanding of the basics of some financial concepts but would need guidance on comprehending more specific terms.
The results of the second quiz show the level of financial literacy in the country is promising and would continue to improve if taught properly.
Most quiz takers (66.8 percent) know that every month, they should at least make a budget plan and 88.4 percent know that the ideal amount of emergency fund should cover 3 to 6 months’ worth of expenses. However, only ¼ of users know how to set a SMART Financial goal.
Regarding the basics of borrowing, almost all (95 percent) of quiz takers know that paying bills on time every month can help improve their credit score. A total of 77.1 percent also answered that a consumer finance company is an institution that could help them avail cash or product loans.
On the similar topic of loan application, 83 percent knows the concept of loan repayment but only half of respondents know what a cooling off period in a loan is about; 65 percent knows that there are different ways that could help them approve their loans (such as preparing requirements ahead of time, borrowing an amount that you can pay, etc).
