ASK THE EXPERTS: How can we grow our money when times are tight?

Filipinos are reeling from the effects of global oil disruptions caused by the US-Israel war on Iran, which have sent prices skyrocketing.

With half the population rating themselves as poor, managing—and growing—an already stretched income is critical.

"We are expecting disruptions of income flows in households which are supported by remittances particularly from the Middle East," Aristeo Dequito, managing director of CARD MRI, a group of social development organizations that provide services such as microfinance access, insurance, education, and health to low-income and marginalized households.

The massive increases in oil prices, he added, will affect businesses and be followed by utility rate hikes and the peso weakening against the dollar.

"All these will create pressure in Filipino households, decrease their buying power, and thereby negatively affect business expansion."

We asked Dequito, along with two other experts, for financial advice Filipinos can use during these challenging times.

Start with what you can control

“It is high time that every Filipino household tightens (the already tight) everyday budget,” Dequito said in an email to GMA News Online. 

“We think the goal should be to stay afloat. This can be done by being intentional in spending every peso. For example, make an inventory of all the everyday expenses on food, transport, load, bills, and other small, impulsive daily buys. It can be surprising how much we spend on expenses which we think are small and insignificant but actually accumulate.”

“Another is to prioritize spending,” he added. “We all should be considering our needs first like food and utilities; important obligations like debt payments and school fees; and then those that we can live without.”

Mike Magpily, the chief marketing officer of UnionDigital Bank, also stresses the importance of saving regularly, no matter the amount. Consistency can help create a sense of security in uncertain times. 

“Look for ways to reduce unnecessary costs,” he added in an email to GMA News Online. “For example, choosing digital payment options that eliminate transfer fees can help stretch your budget further.”

Find more ways to earn

Apart from being mindful about one’s expenses, one can find additional ways to earn. Dequito suggests:

• online selling,
• doing buy-and-sell,
• running errands for other people
• charging a fee for skills like cooking, tutoring, or making repairs

Freelance work and monetizing your hobbies are other options, says Magpily. 

Avoid gambling, schemes

Alejandro Molina, vice president and head of digital trading at BDO Securities Corporation, warns against the allure of online gambling.

“There may be a tendency for some to look at online gambling as a way to supplement income, but this comes with significant risks. More often than not, the outcomes may not be favorable, so it would be better to avoid this altogether,” he said in an email to GMA News Online.

Dequito also cautions against offers such as quick, guaranteed "money back" schemes. “These are scams,” he said.

For Magpily, managing what one earns is as important as making a living. Growing one’s income “is also about making sure that more of what you earn stays with you,” he said. “Digital tools can help by tracking income, managing cash flow, and reducing transaction costs.”

Should you get a loan?

Dequito expects to see an increase in loan applications for business and personal consumption at CARD MRI. But when is the right time to apply for a loan?

“When it addresses a real need or helps improve your situation, such as covering an emergency, supporting a livelihood, or managing short-term cash flow gaps,” Magpily advised. 

Here are three questions to ask oneself, he says:

• Do I really need it right now?
• Can I comfortably repay it on time? 
• Will this help me move forward, not just get by?

The loan should not be used for “gambling, buying things beyond your means, or spending on non-essential items you can live without,” said Magpily, as this “often leads to deeper financial strain instead of relief.”

One should also be cautious of offers that seem too easy or are unclear. 

“Always review interest rates, repayment terms, and the legitimacy of the provider,” he said.

During this crisis, microfinance institutions such as CARD MRI provide small loans fast to low-income households and small entrepreneurs who often don’t have access to traditional banks. This way, says Dequito, the people they serve can avoid loan sharks and other high-interest informal lenders. They don’t need to resort to selling important assets to get by, either. 

The institution may also encourage clients to get alternative loan products that will allow them to adapt to the situation, such as solar loans to manage electric bills.

Banks, meanwhile, have a part to play in supporting businesses by “providing access to financing, which can help sustain operations and preserve employment,” said Molina.

To be more relevant to people’s needs, banks must reduce friction and costs in everyday transactions; provide responsible and transparent lending options; encourage savings through accessible, high–interest accounts; and equip customers with financial knowledge to make better decisions, says Magpily. He points to UnionDigital Bank, which specifically targets underserved and unbanked communities by making banking supportive, rather than intimidating. 

Investments and market outlook

As for Filipinos who have the capacity to invest, Molina has some advice. 

“For those who are already invested in dividend-paying assets that provide steady returns, it may be worth continuing to hold these as part of a long-term strategy. Some cyclical sectors, such as consumer-related companies, may face headwinds if spending slows down, which could also affect their [operations and] share price performance,” he said.

“Investors may consider reviewing their portfolios and looking at more defensive sectors, such as utilities or telecommunications, which are generally more stable and may provide consistent dividend yields. At the same time, returns from these investments are typically steady rather than high, so they are best viewed as part of a more prudent, long-term investment approach.”

The role of government

Meanwhile, the government has the responsibility to “cushion the citizens against extreme effects [of the US-Israel war on Iran] by implementing policies to reduce pressure on basic needs: temporary fuel subsidies, anti-hoarding acts, and supporting local production to even out supply and prices,” said Dequito.

For Magpily, the government must ensure that support reaches those who need it most, and that action is taken swiftly. “Our kababayans are struggling every day, and they look to the government for stability and assurance that concrete steps are being taken to help them,” he said.

Civil society, for its part, can support the communities they belong to by putting up food banks and community pantries, and conducting emergency relief operations.

The private sector should also step up by implementing flexible work arrangements and austerity measures such as carpooling, said Dequito. Its main contributions during the crisis are ensuring job security and enabling income growth. — BM, GMA News