One of yesterday’s Business World Online articles entitled: Statistics agency cites worrisome savings data elicited discussion in Colayco Foundation. Here’s some of our insights:

Guita T. Gopalan, Managing Director

In the Colayco Foundation’s many years of advocating financial literacy and financial freedom, we have observed that the savings problem affects all income classes regardless of  whether they are earning six figure incomes or are living on a street sweeper’s salary.

Through the generosity of partners, we at Colayco Foundation are able to give training to low income earners: factory workers, tricycle drivers, janitors, etc. In these events we have noted that despite very limited income, families spend for recreation. In many cases, we’ve found families neck deep in debt but still spending on ‘wants’. While in terms of ratio, recreational spending is small compared to spending on necessities, it is a behavior which keeps them in a cycle of debt and financial insecurity.

The most alarming reality is that the financial behaviors of low income households are pretty much the same with their middle and high income counterparts. There is a savings problem, a huge debt problem and ultimately an inability to achieve wealth among Filipinos.

Armand Q. Bengco, Executive Director

Savings is a habit – a repetitive action. And just like any good habit – it’s very difficult to start in the same way that it is difficult to start exercising, eating healthy, stop smoking, etc. Why is that so? Because the benefits of saving take time to manifest, the myth of instant wealth and easy money remains alive. The notion that saving is depriving oneself further deters Filipinos from saving. It’s a big contrast to spending on recreation or consumer goods which give immediate but short-term satisfaction.

I remember my own personal struggle to take hold of my personal finances beginning 9 years ago: I was heavily in debt, a limited income and with a family of 4 to support. What finally convinced and motivated me to start saving was when Mr. Colayco said “If you can not do everything, why you do nothing? Start with something!” And it hit me! I can start small – save what I could and increase it when it’s reasonable to do so. I may not be wealthy YET, but I’m getting there one step at a time. This is the mindset and commitment I want to share with everyone.

This is the work of Colayco Founation to motivate and encourage Filipinos to take a hold of their personal finances – to Be GOOD: grow out of debt, to actively embark on their Wealth Journey, to explore their PISObilities by developing their InvestAbility and to being fully InvestEd in their obligation to be wealthy. We also develop an environment which encourages Filipinos to be financially responsible in tandem with financial institutions, government, the private sector and educators.

Through saving and investing, a Filipino’s dreams can become reality. By saving Php33 a day Filipinos could grow their money to Php2.1-5.7 million in 30 years and even as much as Php94.7 million in 40 years. Imagine that!

Mary Anne B. Colayco, President

I have three points on the reason brought forward by those who save less.

1. The costs of living are higher but income is not commensurately higher…ergo, less savings.
2. Spending for vices (alcohol, gambling, drugs, unnecessary shopping, clubbing, etc) like opium… drown out their pain.
3. It is also possible that good education has become too expensive. And that over all there are fewer chances of getting jobs, especially good ones, with mediocre education.  So why spend on education?

No matter how real these points are to some people, it still doesn’t negate the importance for each to overcome the difficulty of saving.  Follow the formula INCOME minus SAVINGS equals EXPENSES.  Even if the savings are less for the reasons stated, continue and invest over a long term basis.

Francisco J. Colayco, Chairman

This is simply a validation of a mindset of ” induced helplessness”, i.e ” eh kulang na rin lang, gastusin na and enjoy.” It is also an indictment on staying within one’s comfort zones and not exploring new ways to improve one’s lives. Perhaps, it is still a manifestation of the mindset of entitlement vs the mindset of achievement: “asa sa iba; hindi sa sarili.” Additionally, so many have fallen to become losers. They may have developed this habit of losing as a result of utter dependence on others other than themselves.