The current coronavirus pandemic has not just threatened the entire world in terms of health security. Its impacts range from money to economy, mental condition, and women's and children's welfare. According to the World Health Organization (WHO), Covid-19 has led to disruptions in livelihood, food systems, health, and social conditions. These impacts left Pinoys wondering about ways to cope and survive, highlighting the need to come up with a better source of income and a healthier financial condition in the future.
Based on Gobear’s Financial Health Index conducted during the quarantine period among those who have access to the internet, people belonging to the age group of 18-25 years old felt that COVID-19 posed moderate to a very high level of threat to their financial state. Beyond the danger, Filipinos also realized there were aspects of their financial health where they fall short and which they need to work on.
1. Health insurance
Manulife also conducted a study from January to July 2020 and revealed that financial worries have a huge impact on Filipinos aim to get protected against critical illnesses. The study further showed that 63% of Filipinos consider health as a top priority but at least 50% of them engage in unhealthy habits. Pinoys are fond of unhealthy eating habits, alcohol intake, physical inactivity, smoking, and lack of sleep.
GoBear’s results showed that around 46% of the respondents are looking forward to investing in health insurance due to the pandemic. Gone are the days when health insurance is a luxury to spend on. At present, we all have different choices of insurance packages to choose from. Prepaid health cards are readily available insurance options that offer a chance to be customized based on each need and medical condition.
In 2017, the Bangko Sentral ng Pilipinas conducted a study that found out that only 1 out of 4 Filipinos have savings. Recently, the pandemic led to millions of people losing their jobs and depending on the government for financial aid. Most of Gobear’s respondents said they can survive for no more than six months should they lose their main source of income due to COVID-19.
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The pandemic and other types of crisis make most of us realize how important it is to have an emergency fund or savings to continue surviving. The lack of money to be used for emergencies has made many realize the importance of a financial cushion to be used for emergencies.
3. Debt repayments
Debts are probably one of the most difficult problems to resolve in any regular Filipino household. Our FHI showed that debts and loans to pay off are one of the major factors that hinder many of us from achieving financial security.
As we all look forward to the year 2021, we should not only focus on earning more money but also on reducing our money obligations from banks and other types of lenders. Whether it is from credit cards, online loans, personal loans, and other types of financial facilities, every decision should be planned. Without a good financial plan and household budget, we all would end up at the same point as the shortfall.
4. Retirement planning
Planning for the golden years has been difficult for many of us. We rarely prepare for those days when our bodies weaken and leave the jobs we have treasured for years. Getting old has not been a part of our life plans not until the onslaught of COVID-19. Among those surveyed by GoBear, only 24% are confident they could have a comfortable lifestyle during retirement age. Only 13% are actively saving for this life stage while 18% said they are not yet planning about it.
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Planning for your retirement is important because it ensures financial security as you grow old. Most people who planned their retirement are happier because they have fewer debts to worry about and enough financial cushion to save them in times of emergencies. If you are about to start a retirement fund, consider your actual current age to determine how much money to stash. Experts advise that people in their 20’s should save 10% of their salary while those in their 30’s should set aside 15%.
5. Passive income
Before the pandemic, YOLO is almost everyone’s motto. We work our 8-5 jobs then enjoy life right after. Sometimes we miss work because we believe some great life pleasures only come once. But COVID-19 has the crudest way of making everyone realize how unprepared most of us are to face a crisis. And so, during the quarantine, we tried to look for ways to get an extra source of income, no matter how hard it could be.
Among those who participated in the Financial Health Index survey, about 44% do not have a source of income while 36% started building it. The majority of those who have been consistently maintaining multiple sources of income belongs to 46 years old and above.
The current health crisis becomes an eye-opener for many to realize the financial gaps we failed to see before. Emerging from the pandemic strong and secured seems difficult but is certainly possible only if we identified the areas in which we fell short and start planning and acting on how to improve on these aspects.