Uncertainties caused by COVID-19 have driven more Filipinos to save extra, but they do it without careful planning, a survey commissioned by Hong Kong-based AIA Group Limited revealed on Tuesday, July 20.
Based on AIA’s Save Smarter Study 2021, the survey showed that fear and insecurity arising from the pandemic have driven as many as 77 percent of Filipinos 25-years and above to agree that they now plan to put more aside for savings.
However, the study also revealed that 94 percent of the 800 people surveyed in the Philippines use low-interest bank deposits as a savings vehicle which may mean depreciation of their hard-earned money.
While 45 percent of the Filipino respondents said they reduced their savings in 2020, 65 percent of them plan to increase their savings this year with 53 percent planning to raise their savings by up to 50 percent and 12 percent planning an increase of over 50 percent.
The study also showed that household savings trends and objectives were changing. Preparing for emergency spending (72 percent), guaranteeing financial security in case of misfortune (65 percent) and coverage for medical expenses (62 percent), topping the list of savings objectives.
A lower but nonetheless important priority remains saving for typical life goals such as education, getting married, buying a house (50 percent) or retirement (57 percent).
Although Filipinos seemed to have a more disciplined approach to savings, a quarter of the respondents simply save what money they have after expenses without a proactive saving plan and 22 percent put aside a fixed overall amount. Only 29 percent list out their savings goals and put aside savings to meet them.
Despite Filipinos savings discipline, almost all surveyed, or 94 percent, still prefer the liquidity of bank savings, with 91 percent using demand deposits and a massive 40 percent having no other form of savings at all.
Meanwhile, the impact of the pandemic fueled a stronger interest in insurance with three quarters of Filipinos agreeing insurance has become more important than ever to provide better protection in case of unexpected incidents.
More than a quarter of Filipino respondents said they plan to increase their allocation of funds to insurance. Of that number, 80 percent intend to spend more on life insurance with savings and 60 percent say they plan to spend more on medical and health protection.
The fear and uncertainty brought by the pandemic also affected wellbeing as 76 percent of Filipinos saying COVID-19 negatively impacted their social life last year while 39 percent believing it adversely affected their health.
The financial impact has also been significant with an average income reduction of 29 percent in the Philippines and over two-thirds saying COVID-19 had negatively impacted their personal or family income (71 percent) and financial status (69 percent).
And these impacts may not end any time soon, with 82 percent believing COVID-19 will persist beyond June 2021 and 18 percent believing it will last until 2023 or beyond.