Young Filipinos worry about paying debt, bills
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MANILA, Philippines — “Live within one’s means” is a bit of advice often given but seldom followed.
It is about spending money only on what one can afford, but the current lifestyle, particularly of the so-called Millennial and Gen Z population, seem to throw caution to the wind. They simply like to travel, have the latest gadgets, and keep up with fashion trends and entertainment — usually charged to their credit cards.
The result is that personal debt is now a big concern for 47 percent of Filipinos, with the problem more pronounced for those age 41 and below, or the Millennials and Zoomers, according to the third quarter Consumer Pulse Survey of US credit reporting firm TransUnion.
The survey, conducted from Aug. 19 through Sept. 1 and covering 1,013 Filipino adults, showed that more than half of young Filipinos anticipate missing payments on bills and loans.
TransUnion noted that 58 percent of Gen Z and 55 percent of Millennials “expect to be unable to pay at least one of their current bills and loans in full.”
All other age groups, the survey noted, are already cutting back on nonessential spending, adding to worrying signs an economic recession might be underway as consumers grapple with surging costs.
The survey said 76 percent of Filipinos believe the economy “is either already in a recession or will enter one by the end of 2023.”
The TransUnion survey showed Filipinos in general were preparing for a recession by increasing savings and cutting discretionary expenses such as dining out, travel, and entertainment over the last three months.
“Filipinos said that their greatest spending increases in the next three months are likely to be on bills and loans, medical care/services, and retirement funds and investing,” TransUnion said. “They said they are least likely to spend more on large purchases like cars or appliances.”
“Baby Boomers (72 percent) and Gen X (58 percent) reduced their discretionary spending the most among age groups in the past three months, and Gen Z (69 percent) and Millennials (62 percent) said they saved more in emergency funds in the last three months compared to other generations,” TransUnion said.
Goals
Nearly every respondent said they believe having access to credit and lending products is important in achieving financial goals, and 56 percent said that they are planning to apply for new credit or refinance existing credit within the next year, according to TransUnion.
“More than half (54 percent) of Filipinos who said they plan to apply for new credit within the next year said that they would apply for a new personal loan, while 41 percent said that they’ll apply for a new credit card,” the company said.
One other reason why personal debt is worrying a lot of Filipinos is that few of the survey respondents expect incomes to go up in the next 12 months. This leaves them with the lone option of cutting back on unnecessary expenses to ride out the expected recession.
“As more Filipinos’ financial literacy improves, TransUnion is optimistic that more people will have the knowledge and tools they need to make responsible financial decisions, particularly at a time when economic indicators reveal a stressed environment,” Pia Arellano, president and CEO of TransUnion Philippines, said in a statement.
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