Days before the government imposed the Enhanced Community Quarantine (ECQ) in NCR and across provinces in Luzon, a lot of Filipinos resorted to hoarding and panic buying.
As COVID-19 cases increased, people also flocked to the supermarkets and drugstores for food and health supplies.
Local government units began to work round the clock to ensure that the poorest households are given food and cash assistance.
It may feel like there’s no end in sight now that the Enhanced Community Quarantine has been extended until April 30, 2020. But with our combined efforts, we will be able to surpass this challenge and flatten the curve.
The COVID-19 health crisis has definitely made us think long and hard about the status of our finances.
While we’re all on quarantine, let us talk about the things that we will realize about money and our financial status, as well as what we should do with our finances once the crisis is over.
#1 Save money, spend responsibly
According to the latest data by the Philippine Statistics Authority, employment and unemployment rates remained the same in January 2020, with more people becoming fit to work.
There are also a lot of work opportunities for Filipinos, especially now that the gig economy is booming. Selling stuff online has never been easier, too.
But despite these opportunities, many are still struggling financially. More often than not, paychecks are already allocated to pay bills, loans, and debts.
When it comes to managing personal finances, Filipinos have a lot to learn. During this quarantine, we will all realize the value of saving money and spending money responsibly.
#2 Build emergency funds and invest in retirement plans
Filipinos’ naturally happy disposition and ‘come what may’ mentality can sometimes do more harm than good. Especially when it comes to building an emergency fund or buying a retirement plan.
Senior citizens mostly rely on their SSS and GSIS pensions. Unless they were financially wise enough to buy a separate retirement plan years ago.
However, the monthly stipend from SSS and GSIS is not enough to cover all living expenses (my mom receives an SSS pension of P2,000 per month).
But with the current health crisis and Enhanced Community Quarantine restrictions, everyone is worried about how long the money will last (if it hasn’t run out already).
Now it’s time to re-evaluate priorities and consider building an emergency fund or getting a retirement plan.
Action plan: Don’t give in to peer pressure or to your people-pleasing tendencies that influence your spending habits. Instead of splurging on non-essentials, find side hustles to help you earn more. Set a portion of your monthly income for your emergency funds or for your retirement plan.
#3 Prioritize insurance products
Some Filipinos ignore the value of investing in insurance products. We all believe that health is wealth, but that’s basically it for some.
In the past, a handful of insurance companies in the Philippines failed to fulfill their commitments to clients. As a result, we tend to shy away from insurance agents and financial advisors and are just skeptical about insurance products as a whole.
But insurance companies will not run away with your money. There are well-known and established insurance companies that will change your outlook about getting insured.
During this health crisis, a lot of us will definitely start thinking about getting health or life insurance for ourselves and for our loved ones.
Covid-19 treatments cost anywhere from P15,000 to as much as P1.5 million. If you’re confined in a private hospital with a “normal case” of COVID-19, it could cost you roughly P1.1 million pesos to get treated.
Prevention is better than cure, but it will surely help to have insurance coverage when you do get sick!
Action plan: Learn more about your PhilHealth membership and coverage. You may also compare and explore other health insurance packages that are more suited to your needs.
#4 Live within your means = no bad debts
Most Filipinos have bad debts because it’s so much easier to spend money than to save money.
It’s so easy to splurge on our wants and overlook the compounding interest rates that are tied up with front-loading payments.
Some lending companies are very quick to release personal loans, enticing us to apply for one even if we don’t really need to.
There are also informal lenders that charge up to 20% interest rates and don’t even require collateral.
Action plan: Start paying off those debts. Say goodbye to unnecessary expenses. Compare interest rates before you avail of financial products, like credit cards and personal loans.
#5 Financial freedom can happen now
The COVID-19 crisis is a global crisis. Even if our resources are running low, we are also realizing that we can still protect ourselves financially once the crisis is over.
If you lost your job or your client during the crisis, you can still get a new job or land a new client by applying in job search websites and apps.
There are also advisors and influencers in the Philippines that offer financial literacy courses and seminars online.
You can check investment and finance blogs to help you on your journey to financial freedom, too.
Action plan: Do you have bad debts? Settle them as soon as you can to avoid compounding interest rates. Also, follow our blog to get the best MoneySmart tips!
It requires strong discipline and a lot of sacrifice to successfully manage your finances and secure your future. What other money lessons have you learned the past few weeks? Share them in the comments below.