COMMUNITY FINANCIAL LITERACY: THE CASE OF PIO, MODEL COMMUNITY,

PORAC, PAMPANGA, PHILIPPINES

Ernesto L. Centeno1 and Danilo S. Vargas2
Central Luzon State University1 Central Luzon State University2
elcenteno@dotclsu.edu.ph1 dsvargas@clsu.edu.ph2

ABSTRACT

The study used the phenomenological research design. This was conducted in Brgy. Pio, Model
Community, Porac, Pampanga. Respondents chosen for the study have been composed of parents
(25 yrs. old and above) who are active in managing finances for their household needs.
Respondents have been observed and interviewed using the self-administered guide
questionnaires. In the observation and interview, the researcher was able to find out that most of
the residents of Barangay Pio, Model Community were not those literate financially due to (1) lack
of education, (2) lack of background in managing money, (3) was not able to attend a seminar on
financial management, (4) was not able to encounter any financial management literacy program
from the Local Government.

Keywords: Financial Literacy, Model Community

INTRODUCTION

According to Filipiak and Walle (2015), in a developing country such as the Philippines,
there have been abundant products available even for lower-income individuals, such as bank
account that can be opened without any minimum deposit; thus providing for huge alternatives to
choose from. Consequently, the options to choose are in the hand of every individual. Lusardi and
Tufano (2009) posit that the need for financial literacy as the financial markets recently offer more
complex products and the responsibility for investing and saving has shifted from government and
employers.
On the other hand, (van Rooij et al., 2009; Lusardi et al., 2010; Lusardi and Mitchell, 2011;
Allgood and Walstad, 2013; Agarwalla et al., 2013) have raised serious issues on the individual's
potentials to secure his financial well-being. Meanwhile, Bernanke (2011) stated that changing the
needs of individuals along with the passage of time and the dynamic nature of the financial
products, there is a dire need for a continual update of financial literacy among individuals of all
age groups.
This explained the reason for having several economies and organizations that attempted
to enhance financial literacy for everyone. According to Garg (2017), in Australia for instance,
they have launched the Australian Securities and Investment Commission (ASIC, 2011); whilst,
in New Zealand, the National Strategy for Financial Literacy (2012) was framed. Garg (2017) also

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added that in the United Kingdom, they have launched Financial Services Authority of UK, while
in India, they have opened various Financial Literacy Centers such as Reserve Bank of India which
have been entrusted to undertake the efforts to improve financial literacy (Garg, 2017).
Financial literacy plays a big role and shows important relevance for the economies,
especially in a developing country. Financial literacy heightened the financial well-being of every
individual in the country. Garg (2017) stated that financial literacy is considered as a means to
expedite financial well-being, hence, possessing financial literacy would help the households with
day-to-day financial tasks, deal with a financial emergency, and even pull them out of the clutches
of poverty (Garg, 2017). "Financial literacy and financial inclusion are integral to each other and
are important because they are integral to attacking poverty. They are two elements of an integral
strategy; while financial inclusion provides access, financial literacy provides awareness" (Garg,
2017 as cited from Subbarao, 2013). The question is: how to raise financial literacy to the citizens
of Barangay Pio, Model Community, Porac, Pampanga?

OBJECTIVES OF THE STUDY

In general, this study aimed to determine the financial literacy of the members of the community
in Brgy. Pio, Model Community, Porac, Pampanga.
Specifically, aimed to:
1.Find out the status of financial literacy of the respondents

REVIEW OF RELATED LITERATURE AND STUDIES

According to Olos (2016), as per Standard & Poor's (S&P) Ratings Services survey last
year, only 25% of Filipinos are financially literate. That means there are about 75 million
Filipinos who have no idea about inflation, risk diversification, insurance, compound interest,
and even the idea of having a savings account in a bank. He believes that the said 25% consists
of the wealthy (upper 10% of the population) while the 15% is distributed to the educated,
working, and middle classes who are frequent users of basic financial services offered by banks,
insurance companies, and other financial institutions. The S&P survey was conducted in 143
countries with Denmark, Sweden, and Norway sharing the top spot (Olos, 2016). He added that
the results of the survey are not new to him as he used to be part of the other 75%. Growing up in
a squatter area near Manila, he has experienced first-hand poverty and lack of access to financial
products.
According to Norman (2010), financial education is increasingly important, and not just
for investors. He adds that it is becoming essential for the average family trying to decide how to
balance its budget, buy a home, fund the children's education and ensure an income when the
parents retire (Norman 2010). He stated that of course, people have always been responsible for
managing their finances on a day to day basis, that is spent on a holiday or save for new furniture;
how much to put aside for a children's education or to set them up in life, but recent developments

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have made financial education and awareness increasingly important for financial well-being
(Norman, 2010). Although some authors seem to look at financial education literacy as related to
behaviors such as unusual preferences, and behavioral biases, yet the importance of being financial
literate remains to be vital, and thus need for financial education literacy (Norman, 2006).
Meanwhile, Huston (2010), in "Measuring Financial Literacy" pointed out that financial
literacy does not necessarily imply optimal behaviors or outcomes since characteristics such as
impulsiveness, behavioral biases, unusual preferences, or external circumstances may also
contribute to poor financial decision making, while there are some propositions which deem to act
as hindrances to financial education.
Authors Gilberto Llanto and Maureen Ane Rosellon, PIDS president and research
associate, respectively, emphasized that access to finance allows the poor to accumulate assets like
savings and insurance to protect them from potential risks and shocks, and to invest in income-
generating activities (“Improving Access and Financial Literacy, n.d.”).
According to Greenspan (n.d.), a formula for success for any financial literacy program
includes a motivated teacher, ample resources, a relevant curriculum, and community involvement.
Furthermore, Planning a Connected Curriculum (DPI 2003) has some guidelines that may assist
stakeholders in starting a program. Greenspan (n.d.) adds that there are some additional key
characteristics or principles to keep in mind when developing an effective financial literacy
program: (a) Clear mission and vision.
According to Hagel, Brown, de Maar, & Wooll (2018) the front line is, of course, where
most problems or opportunities first appear—and where people find themselves crafting strategies
and taking actions to address them. Such moves usually need to happen at top speed, since the
window of time to address the issue at hand is often short—too short to accommodate exhaustive
analysis, planning, and approval processes. It's no surprise that many organizations look to speed
reactions and solve problems more quickly. But workgroups aiming to accelerate performance
improvement should adopt a different mindset: They should act rather than react According to
Hagel, Brown, de Maar, & Wooll (2018).

METHODOLOGY
The study used the phenomenological research design. This was conducted in Brgy. Pio,
Model Community, Porac, Pampanga. Respondents chosen for the study have been composed of
parents (25 yrs. old and above) who are active in managing finances for their household needs.
Respondents have been observed and interviewed using the self-administered guide outlines and
questionnaires. Each respondent had two characteristics that have been observed: knowledge in
managing their finances, and willingness to raise financial literacy.

RESULTS AND DISCUSSIONS

Status of Financial Literacy in Brgy. Pio, Model Community, Porac, Pampanga.

Respondent 1 (R1) is one of the residents of Barangay Pio, Model Community who was
not able to finish elementary. Her husband is just a Pedicab driver. According to her, the money
that her husband is giving to her is not enough for their daily need that is why she tried to become
a dealer of cosmetics in their area. She also stated that for you to survive in your daily need, you

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have to find ways to earn extra money. She insists that even if she was not able to finish her
education, she was forced to be bumptious just to meet or to sustain their daily needs since she is
also helping her other siblings; and since she was not able to finish her studies, she has to strive
more.
Meanwhile, Respondent 2 (R2) was not able to finish her study too, but she also finds ways
just to survive in their daily needs through working as a vegetable dealer and direct selling agent.
Respondent 3 (R3) on the other hand, was not able to finish her education as well, her source of
income is coming from her daughter's salary; she insisted that as the head of the family and being
a single mom, she has to do something by being wise in holding and budgeting their money,
although she was not able to finish her studies, she became knowledgeable in budgeting money
because her other siblings are relying on her. She was not able to attend any seminar on financial
literacy from the government but was able to learn from a seminar held by a direct selling company
where she was affiliated with.
This invokes that being financially literate does not require becoming a college graduate,
sometimes because of the situation that they are encountering in life; people are becoming grit just
to survive.
Financial literacy tools have been effectively used to raise the financial literacy of the
citizens of Barangay Pio, Model Community, Porac, Pampanga. When the researcher went to the
locale of the study to find out the financial literacy tools that have been used to raise the financial
literacy in Barangay Pio, Model Community, and he was able to observe that the officials of
Barangay Pio, Model Community have no concrete program in terms of heightening the financial
literacy of the community. To support the said observation, the researcher was able to ask the
residents of Barangay Pio, Model Community about this matter. Respondent 4 (R4) posited that
there was a livelihood program imposed by the local government official of the Barangay Pio such
as manufacturing soap, dishwashing soap, etc. She has also mentioned that in their Barangay the
4Ps have also been implemented, but she said that the livelihood program did not last long while
the 4Ps were biased because the local officials were choosing those people who are not qualified
for the 4Ps program. She added that 4Ps as a program was not good enough because it only teaches
the people to become reliant on the money being given by the government and the program alone
did not give people how to wisely use the money being given to the beneficiaries of the program.
Respondent 5 (R5) on the other hand, has mentioned that there was a program held in
Barangay Pio, Model Community but she said that it was held a long time ago (2002). She added
that the program was able to teach the people how to handle their finances, but there were only
fewer attendees at that seminar. Meanwhile, Respondent 6 (R6) who was Barangay Kagawad in
the other Barangay of Porac has mentioned that even if they have imposed a program or seminar
about financial management, people preferred not to attend the seminar unless the program
includes a raffle that could give people a prize. She added that even if they striving to give
knowledge to people, it is still hard on their part because they cannot force the people to attend the
program. For the researcher, he finds that this scenario is quite alarming because for him being
financially literate is very important. Enticing the Barangay Pio, Model Community officials to
heighten the financial literacy of its citizen. The rest of the respondents have not heard about any
seminar or program about financial management in their area because (1) the officials have lacked
in promoting the seminar or financial management program. (2) People are not aware of it. For
instance, Respondent 7 (R7) mentioned that she was not aware of any program or seminar that has
been organized in their barangay; she finds her ways on how her knowledge can be heightened by
attending a seminar being held by Non-Government Offices (NGOs) or private sectors.

Electronic copy available at: https://ssrn.com/abstract=3823820

 This states that although the Barangay Pio, Model Community made an effort to build a
seminar or financial literacy program the effort was not good enough. Now the question that needs
to be answered is how the officials of the Barangay Pio, Model Community can be enticed to
heighten the financial literacy of its citizen.

CONCLUSIONS
The status of financial literacy in Barangay Pio, Model Community was measured through
observing the present situation of the respondents based on the criteria given. Interviewing the
respondents has also become helpful for the researcher to know how much literature the residents
are in the locale of the study. In the observation and interview, the researcher was able to find out
that most of the residents of Barangay Pio, Model Community were not those literate financially
due to (1) lack of education, (2) lack of background in managing money, (3) was not able to attend
a seminar on financial management, (4) was not able to encounter any financial management
literacy program from the Local Government Unit of barangay Pio, Model Community.

RECOMMENDATIONS

1.Explore what program the Barangay Pio, Model Community officials can be done to encourage
the citizens to attend and to gain knowledge about financial management.
2.Conduct a study with respondents to find out what knowledge they need to know in financial
management.

REFERENCES

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Electronic copy available at: https://ssrn.com/abstract=3823820

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