Financial Imbeciles

I couldn’t agree more with Citibank’s recent survey where Filipinos have been found to have a financial intelligence quotient of 48. This would make us imbeciles, if it were based on the usual IQ scale. At least we’re still better off than idiots, but already lower than morons! None of these terms edifying in the least. The study only highlights and puts in scientific terms the fact that Filipinos do not know, or just do not save. Whether it be for their retirement, eventual failing health or even for their children. The reality is, we love spending what we earn, even what we have yet to earn.

A similar survey was done months ago by ABS-CBN wherein it was found that most OFW families have little or no savings at all, but have almost all of the creature comforts one can have. Virtual shanties with air condition units, DVD players, branded sound systems and a large TV to name a few. Going up a few rungs on the economic ladder shows no difference. The middle class shows just more of the same. Of course, those at the top of the ladder need not be surveyed at all. But it all boils down to the fact that Filipinos just love to live like the Joneses, or at least have grass that is greener on their side of the fence. And the survey uncovers the really bad habit of credit card debt. It uncovered that most only pay a little more than the minimum required by the card company, which does not really reduce the debt in any way. I know people who have been in credit card debt for years! This shows how many live well beyond their means.

And just traveling the roads of the Metro would show another reason why Filipinos are financial imbeciles – luxury cars. We are a third world country, but it doesn’t seem that way based on the cars on the road. Mercedes Benz, BMWs, Volvos, Jaguars, Porsches and even Ferraris and Lamborghinis are here! Who said we’re poor! An automobile depreciates the second its tires hit the road right out of the dealer. But does it matter? Of course not, for as long as we’re seen in one of these expensive beauties! At least until we can no longer pay for its monthly installments. And a trip to a bank’s lot for repossessed cars just proves that point.

As for health care and the eventual morbidity that everybody will go through, it is not even considered. We’re still superstitious about such things as health insurance and even funeral expenses, even if we will all get there sooner or later! So very few actually save for their morbidity and even funeral and burial expenses. It is just taboo for some to even talk about it, less plan for it!

 And so here we are. Financial imbeciles indeed. I once attended a financial seminar held by Francisco Colayco, where he came up with an appropriate equation. We usually define savings as Income less Expenses = Savings. But it really should be Income less Savings = Expenses. We should naturally put aside money we make for things like sickness, emergencies, retirement and even death. Things that usually rattle us to insanity when they happen. We tend to retire early before we even start to make a decent living. So I believe a new form of education is called for in this country, that should be taught early in schools as well. Sound financial planning. At least for us to be ‘above average’. Who wants to be called an imbecile in the first place?