“The financial preparedness of our nation’s youth is essential to their well-being and of vital importance to our economic future.”
– Ben Bernanke,
former US Federal Reserve chairman
THE Securities and Exchange Commission (SEC) is making headlines in social media as it pushes to make financial literacy a mandatory subject in the Philippine high school curriculum. It has even revamped its SEC Academy, offering free online courses on personal finance, investing and how to spot investment scams.
Similar efforts have been made in the past. Back in 2019 and again in 2022, Sen. Sherwin Gatchalian filed a bill that will require the teaching of financial literacy in elementary, secondary and tertiary levels, including technical-vocational institutions. Then in 2023, Cagayan de Oro City Rep. Lordan Suan filed House Bill 9162, proposing to include financial literacy education in the senior high school curriculum. Unfortunately, several years after they were filed, both bills are still at the committee level pending review.
Meanwhile, surveys show that overall adult financial literacy rates hover near 25 percent to 50 percent. Half of Filipino adults currently consider themselves lacking a grasp of basic financial concepts like inflation, compounding interest, cash flow and debt management. This raises some concern considering that findings in a recent study among senior high school students revealed that parents were their primary source of financial knowledge. No wonder the same respondents faced challenges in money management and showed limited familiarity with financial concepts and terms. As a Filipino saying goes, “Kung ano ang nakikita sa mga matatanda, s’yang ginagawa ng mga bata.”
Unless we do something about it now, the cycle of financial ignorance and dependency will continue in the family, in the community and in our country. We need to stop this vicious cycle. And the earlier we teach our children, the better. Financial literacy taught early means wiser money moves and fewer money mistakes for our children, down the road.
Aside from mathematics, science, language and social studies, financial education is essential for students because it builds core life skills. Skills like budgeting, savings, investing, smart borrowing are what they will face and need to learn as they go through their daily grind. They need to learn how to track their income and expenses to avoid overspending and ending in debt. They need to appreciate the importance of setting aside money consistently for emergencies and future goals so they don’t merely rely on “ayuda.” They need to be aware of the different opportunities and tools that can help them grow and protect their money so they can live with comfort and dignity. They need to understand how loans, interest rates and credit cards work before entering into any agreements so they avoid predatory lending.
Aside from learning the above core money moves, being financially educated will help our youngsters avoid major money pitfalls, such as scams and frauds, debt traps and impulse buying. We hear horror stories of people being lured to quick money schemes and ended up being scammed big time. Retirees, students, housewives and even professionals losing their lifetime savings to promises of high returns on their investments. Having adequate financial knowledge will allow the youth to spot online tricks, Ponzi-like schemes and other fraudulent financial scams. Many also find themselves in serious financial dilemmas caused either by their unplanned spending or overspending. Especially with more platforms offering easy and convenient buying and paying options, such as buy now-pay later, zero interest or buy-one-take-one deals, more Filipinos are led into debt traps. Knowing how to budget and track expenses will help curb dangerous spending habits.
Credit card ownership is common among the youth. This is a concern since credit card debt remains to be top on the list of debt traps, reaching a critical risk level with a 425-percent debt-to-income ratio — the highest in Southeast Asia. The average cardholder owes roughly P92,800 against a mean monthly income of P21,900. A big chunk of the debt comes from the interest and penalties incurred for delayed and staggered payments. We can prevent this with more Filipinos being aware of the proper use of credit cards and managing their cash flow and debt, in general.
The future is not all that bleak for our younger generations. Financial literacy among the youth in the Philippines is steadily evolving. While only about 21 percent to 27 percent of Filipino teens actively maintain personal savings, the rate of account ownership among teens ages 15 to 19 rose to 34 percent, up from 27 percent. It helps that our youths are digital natives. They are more into online transactions, utilizing electronic devices and e-wallets platforms which have resulted in increased exposure to digital finance. The Bangko Sentral ng Pilipinas’ youth-focused inclusion campaigns, the promotion of youth entrepreneurship and financial literacy in all education levels, and the integration of money management in some of the subjects are, somehow, bridging knowledge gaps among our youth.
But, obviously, these are not enough. We need a stand-alone national law that will mandate all public and private schools, local and state universities, even vocational schools and centers, to develop a course focused solely on personal finance.
“Providing financial education to the younger generation is essential to ensure their security and well-being in the future. A financially literate Filipino youth will be able to make well-informed financial decisions that will positively impact their personal financial circumstances, empowering them to take better advantage of economic opportunities. We teach the youth knowledge and skills to land good jobs, but we don’t teach them how to invest their money. If we can teach them financial literacy, we can help them lead prosperous lives,” said Senate President Sherwin Gatchalian, a strong advocate of financial literacy among the youth.
We hope that the voice of those in the SEC will be heard and not be drowned by all the political noise around us. If people in the government still believe that the youth is the hope of our future, please make this mandatory inclusion happen for a financially woke generation!
