In this survey, it can be assumed that the reason most of us middles-class (i am? i am!) have low Fin-Q is that our companies have retirement coverage, aside from SSS, so those whose salary is lower than 40k do not think much about having another insurance or paying for educational fund of the children.  We live by the day.

Honestly, i am worried that my savings from working overseas is not even enough to make my two kids go to college without hassle. And i am no longer in my prime.

If tomorrow i lose my job, i think i’d go crazy because it’s true, i will only have 2 months of savings to tide me over.

A friend told me once that for a pension plan (called life insurance) to work for my family, the pension my family will receive in case of my untimely demise should be equal or higher than my present salary. Because if it is lower than what they currently receive from me, my family will be financially burdened because the pension is not enough to pay the regular monthly expenses.

There was a time i was angry with my wife because she enrolled me in a pension plan. I thought it was a waste of money. But now i think she should have gotten the one with a higher premium/pension.

Anyway, choose your insurance wisely.

Average Filipino has financial IQ of 48, says American bank

400 respondents polled
By Doris Dumlao
Philippine Daily Inquirer
Posted date: January 18, 2008

MANILA, Philippines — Lacking confidence that their savings can cover emergency needs or support a comfortable retirement, the average Filipino has a “financial intelligence quotient” of only 47.8, less than half the maximum score of 100, according to Citibank.
The score was derived from the American banking giant’s Fin-Q survey, a study across the Asia-Pacific designed to measure the financial quotient or financial intelligence of consumers aged 18 to 40, who have at least a bank account or a credit card.

The survey, whose main findings were released at a press briefing Thursday, showed that 62 percent of Filipino respondents belonging to the middle-income working class had a score of less than 50.

No retirement planning

The survey, administered online and conducted in the last quarter of 2007, polled 400 Filipino respondents across the country earning an average of P30,000 per month.

About 30 percent of the respondents were earning under P100,000 a year, while 34 percent belonged to the P100,000-P300,000 income bracket.

About 28 percent were earning more than P300,000 while 8 percent refused to reveal their income bracket.

“Based on the Fin-Q results, only 1 out of 10 Filipino respondents is consciously saving up for retirement. The rest have some savings but don’t know if it will be enough. Others have no idea at all how much they need or have not started planning,” said Agustin Davalos, Citibank Philippines’ retail bank director.

“If they lost their jobs tomorrow, or suddenly fall ill and cannot work, their savings would last only for nine weeks (about two months) before they run out of money,” Davalos said.

The benchmark for a comfortable buffer in case of a sudden sickness or loss of job is to maintain liquid savings equal to three to six months worth of current earnings.

The survey also showed that almost 7 out of 10 Filipino respondents own insurance but only half of this number felt that the coverage was enough to protect them and their families.

Other key findings

Majority of the Filipino respondents attempt to come up with a monthly budget but only 33 percent stick to self-imposed expenditure ceilings.

More than half of the respondents save “when they can” but only 36 percent make it a discipline to set aside money each payday.

About 40 percent pay their full credit card balance monthly while a greater proportion are “revolvers” — 38 percent pay more than the minimum and 22 percent pay only the minimum required.

About a quarter of the respondents either own or rent a house.

Those who believe they have sufficient insurance coverage account for only 32 percent. About 36 percent have life insurance plans while 32 percent do not have any insurance plan at all.

On knowledge on investing in case of a sudden windfall, 53 percent know exactly what to do with their savings. However, a lot of Filipinos have not done much in terms of long-term financial planning as only 13 percent said they know exactly what to do before retirement and are on track with its plans.

More than two out of five have no idea how much they need for retirement or have not started planning.

Only 16 percent of the working middle-class have financial planning developed with financial professionals while 96 percent do not have a will to legally transfer assets and liabilities in case of death.

Eleven questions

Conducted by Australia-based CxC Consulting, the survey scored respondents on 11 different questions closely related to financial well-being, with a maximum possible score of 100 each –much like grading a student based on performance on individual subjects like Math, Science or English.

The questions ranged from their optimism about their financial future to approaches to budgeting and saving to whether they have a formal financial plan and an up-to-date will.

The study also incorporated separate attitudinal and lifestyle questions. The better the financial position is in one particular area, the higher the points garnered.

Credit card payment

In credit card payment patterns, for instance, a respondent who wipes out the entire credit card monthly debt (and thus avoids costly financial charges) gets the full 10 points while one who pays only a slightly higher amount than the required minimum payment gets 5 points. If he pays only the bare minimum, he doesn’t get any point.

“If you look at the areas where we need to improve on, that would be the state of our financial savings, having a formal financial plan and having an up-to-date will, which in turn should also ultimately improve our satisfaction with our quality of life and our confidence in financial future,” said Citibank research specialist Abby Chan.

“While the Fin-Q score may be disappointing, the good news is that more than half of the surveyed population believes in the importance of saving.

The problem lies in having the discipline to do so, which could be due to lack of resources or financial know-how,” Davalos said.

Sunny outlook

The survey also reflected Filipinos’ sunny outlook, as 64 percent said they were satisfied with their current quality of life and 77 percent were optimistic about their future.

“But it’s telling to see that you have 36 percent who said that they are not satisfied [with quality of life] and these are probably the people who sort of dragged down the Philippine score in this area,” Chan said.

“When we grilled down the people who are not satisfied, the saying that ‘money can buy happiness’ seems to work because those not satisfied are those who are significantly lower in terms of income, those who have not yet prepared for their retirement savings, and those who are not that secure about their current jobs,” Chan said.

As expected, younger respondents are more optimistic than their older counterparts because they have less financial responsibilities.

“Based on this survey, [we] learned that Filipinos have the willingness to save but not the discipline to make it a regular habit,” Chan said.

If it’s any measure of its own financial IQ, Citigroup.

With eight million OFWs and an estimated P14.3 billion in remittances in 2007, economists have said that overseas Filipino workers are the emerging middle class in the country. Efforts to educate OFWs on financial planning are expected to shift more private funds into savings and investments away from consumption.

Other survey results:

• 64 percent of respondents are satisfied with their life
• 77 percent are optimistic about their financial future
• Only 33 percent stick to a monthly budget while 58 percent have a budget but don’t stick to it
• Only 36 percent save monthly, while 51 percent save when they can
• 40 percent pay their credit card balances in full monthly, while 38 percent pay “more than the minimum”
• 22 percent pay only the minimum amount due in their credit card statements
• Only 24 percent own their own homes; 18 percent pay a mortgage, 8.0 percent live rent-free, while 27 percent stay rent-free at their parent’s home
• 20 percent are paying rent
• 32 percent feel they have enough insurance, while 36 percent have life insurance only, and 32 percent have no insurance
• 43 percent think they know exactly what to do if they had money to invest, 53 percent think they have a “good idea” on where to invest, while 5.0 percent think they have no idea how to invest
• only 13 percent know that they need to retire well; 42 percent are not sure how much they need but have started saving; 17 percent have no idea how much they need; while 28 percent have not started planning at all
• 84 percent have no formal financial plan
• 96 percent don’t have a fomal will