MANILA, Philippines – Global remittances have hit record highs, yet Filipino families still run out of cash due to poor financial planning, according to a new study by United States-based international payments company UniTeller.
UniTeller said monthly remittances from overseas Filipino workers (OFWs) now average more than 2.5 times the monthly income of recipients.
On average, OFWs send $446 or P22,746 monthly, higher than the average household income of $175 or P8,925.
The Philippines is the 4th largest remittance destination in the world with $34 billion of inflows in 2018.
The Bangko Sentral ng Pilipinas said on Monday, December 16, that personal remittances or transfers in cash or in kind grew by 7.7% to $2.97 billion in October, the highest in 10 months since remittances came at $3.16 billion in December 2018. Year-to-date, personal remittances are up by 4.3% at $27.6 billion.
According to the study, half of remittances received by Filipino households are used for daily needs (25%) and loan repayments (25%). The rest of the funds go to education (13%), savings (13%), and non-essential luxury items (7%).
UniTeller also noted that poor financial planning is experienced by almost 19% of families who admitted that they regularly run out of money.
Around 72% of Filipino families said they will reach out to the OFW when they run out of cash, while 53% said they will forego day-to-day needs if this happens.
Moreover, 41% of families said that the expectation of receiving remittances places emotional stress on the family and 54% said it impacts their relationship with the sender.
The study also revealed that 82% of receivers have the final say on how the cash will be allocated.
While the study showed that very little cash is set aside for savings or investments, 75% of families said they are "extremely eager" to learn and cultivate good financial habits.
The study also showed that 78% of respondents have a mobile wallet account and 97% have a smartphone.
However, families are still not using popular cash transfer mobile applications. Around 67% of respondents said they still use cash pick-ups. Less than half or 41% course cash through banks, while 29% use mobile wallets.
"Indicating the appetite for this to change, 88% are receptive to a semi-digital payments solution that would allow them to initially confirm the transaction online and then subsequently fulfil the transaction at a physical location," the study said.
The resistance to go digital comes from cybersecurity concerns, with 71% of respondents citing the issue. Meanwhile, 57% of respondents said mobile wallets are too complex, while 56% reported not being able to receive funds at all.
"It's firmly on our radar in the coming year to work more closely with our public and private sector partners to enable easier access to remittance services and look at how we innovate our offering," said Noel Cristal, UniTeller Philippines president. – Rappler.com