Based on the latest results of the poverty incidence in the Philippines conducted by the Philippine Statistics Authority, it can be seen that many Filipinos have consequently fallen into poverty. The pandemic put a halt to the economic momentum of the country.
Many have died. Many have gotten sick. Many dreams have been shattered.
Poverty has significantly worsened in the country. The number of poor Filipino families increased from 4.04 million in the first semester of 2018 to 4.74 million in the first semester of 2021. The resulting poverty incidence among Filipino families thus increased from 16.2 percent to 18.0 percent. The number of poor Filipino individuals increased from 22.26 million in the first quarter of 2018 to 26.14 million in the first semester of 2021. The resulting poverty incidence among Filipino individuals thus increased from 21.1 percent to 23.7 percent.
The Monthly Poverty Threshold for a family of five is the estimated amount needed to cover minimum basic food and non-food needs. In the first semester of 2018, the amount was equivalent to P10,532 and, as of the first semester of 2021, the number increased significantly to P12,082. If broken down on a daily basis and assuming 30 days in a month, it would mean that a poor family lives on less than P402 daily. Given poor economic conditions, making ends meet has been more and more challenging.
Given worsening poverty in the country, the challenge then is how to manage finances in light of the New Normal. One way is through income. The government and the private sector must collaborate to restore business opportunities and job opportunities. Both businesses and individuals must figure out how to generate multiple revenue streams. A good combination of active income and passive income based on competence can help in the recovery process. Both businesses and individuals must be agile in pivoting.
The breakdown of the poverty incidence statistics shows key developments. The National Capital Region is the only region that registered single-digit poverty incidence among families with 5.2 percent. Still, the incidence level increased. The region with the highest registered poverty incidence is the Autonomous Region of Muslim Mindanao with 39.4 percent. The ray of hope is that the level is a big improvement from its poverty incidence of 55.9 percent in 2018. The province with the highest poverty incidence is Sulu with 71.9 percent.
We should all live within our means. If income is constrained, then expenses should be lower. Our lifestyle must be based on our income. Priorities therefore have to be identified. Needs are different from wants. Needs are things that are must-haves in life while wants are things that are nice to have in life. During tough times like situations of poverty, needs must be prioritized over wants. If spending will be higher than income, it could lead to cumbersome debt which could further exacerbate the financial conditions.
Moving forward, as the world recovers from the pandemic and as economic conditions hopefully begin to improve, the importance of saving must be at a heightened level of consciousness. Saving is the first step in attaining financial recovery.
We cannot spend what we do not have. We cannot insure what we do not have. We cannot invest what we do not have. The future is uncertain and the pandemic teaches us that saving and having an emergency fund go a long way in managing finances given bad economic cycles. If the gross domestic product is like a bibingka (rice cake), then high poverty can mean that there are many Filipinos who have little or no share of the bibingka. While government is expected to improve the quality of lives, there are simple personal finance acts that can be done to ensure that no Filipino is going to be left behind.
Gemmy Lontoc is a registered financial planner of RFP Philippines. To learn more about personal-financial planning, attend the 93rd RFP program this January 2022. To inquire, e-mail firstname.lastname@example.org or text at 0917-6248110.