Despite the rising costs for medical emergencies, only 20 percent of Filipinos have enough emergency funds to cover expenses for more than three months.
According to the Purple Report, many Filipinos only have savings of up to P50,000, an amount that is not enough to cover unexpected expenses. The Purple Report reveals the state of financial preparedness among Filipinos. It is a study commissioned by EastWest Ageas insurance and was conducted by NielsenIQ, a global consumer intelligence company.
For the majority of Filipinos, long-term financial planning often takes a backseat as 30 percent of their salaries go to basic household expenses.
‘This makes it difficult for people to set aside funds for a rainy day, as a huge chunk of their budget goes to day-to-day concerns like food, rent, transportation, and mortgage,’ EastWest Ageas said.
Stay prepared
Nevertheless, Filipinos still recognize it is important to stay prepared, as it can ease their worries about unexpected situations. In fact, 52 percent are concerned about the health of their loved ones, and 24 percent worry about critical illnesses and the large medical expenses tied to them.
Based on a recently released study from the Philippine Statistics Authority (PSA), ischemic heart disease is the number one cause of death in the country. However, the average Filipino would not be able to shoulder this, with the average treatment cost of more than P690,000.
While government-mandated health and welfare services may cover this, their assistance does not extend to the breadwinner’s possible loss of income. This leaves Filipinos without the adequate buffer they need to recover financially.
Despite growing awareness to prepare for emergencies, getting started is far from easy, as Filipinos still need to plan around their current day-to-day needs.
How ready are Filipinos to be ready?
According to the PURPLE Report, Filipinos become better financial planners as they grow older. Some Filipinos aged 40 and above have reported that they have more than three months’ worth of emergency funds. This trend reflects an improved financial stability as Filipinos age, especially since younger groups report that they have a shorter financial buffer than their older counterparts.
However, the journey towards financial preparedness faces several challenges such as economic pressures like inflation and income instability. To get through emergencies, Filipinos would often rely on their personal savings, receive support from their families and communities, and take out loans from informal channels.
While these highlight Filipinos’ innate resilience, resourcefulness, and generosity, they study said they also show their vulnerability when emergencies arise. ‘Thus, Filipinos need the extra support to help them get through these struggles without compromising their goals,’ the company said.
Rising to the readiness challenge
While Filipinos are practical, the report urged them not to have to forego financial planning to prioritize current needs.
‘Both should come hand-in-hand, partnered with the right tools and financial literacy programs, tailored insurance solutions, and inclusive savings programs, ‘the insurance firm said.
‘The challenge of readiness can be addressed with education, access, and empathy. Every Filipino deserves to have a life that is secure, access to effective and affordable healthcare, and wealth that works for them. By aligning services and solutions with people’s financial needs, more Filipinos can think beyond today and prepare for a better tomorrow,’ EastWest Ageas said.