MANILA, Philippines ⁠⁠⁠⁠– Imagine getting a raise or earning more income, yet still worrying about paying the bills on time. That’s the reality for nearly half of Filipinos according to the latest Q2 2024 Consumer Pulse Study by TransUnion. 

At first glance, the financial situation of many Filipinos appears to be improving. According to the TransUnion study, 42% of respondents reported an increase in income during the second quarter of 2024, a slight uptick from the previous year. On top of this, a resounding 78% of Filipinos are optimistic that their income will continue to rise over the next 12 months. 

But the story doesn’t end there. Despite the positive outlook on income, anxiety over finances is on the rise too. Nearly half of Filipinos (44%) are concerned about their ability to pay their bills and loans in full — 3 percentage points higher than the same time last year. The majority of Filipinos (52%) also expect their bills and loans to increase in the next three months, further straining household budgets.

This has created a sense of cautious optimism among households. While the majority of Filipinos (80%) remain optimistic about their household finances in the next 12 months, this optimism is on a downward trend, with the figure dropping by 4 percentage points compared to the same period in 2023. Meanwhile, the proportion of Filipinos who feel pessimistic (8%) or neutral (12%) about their financial outlook has slightly increased. 

There are many reasons behind this financial anxiety, but the TransUnion study showed that inflation (82%) and job security (64%) worry the biggest percentage of consumers. 

Inflation in July 2024 hit 4.4%, breaching the government’s 2% to 4% target range for the first time since November 2023. The country’s chief socioeconomic planner also identified inflation as a reason why household spending shrank quarter-on-quarter in Q2 2024. And though the unemployment rate in the Philippines has reached near-record lows, many Filipinos still remain underemployed and stuck in low-quality jobs. (READ: Why do Filipinos still ‘feel’ poor despite economic growth and lower unemployment?)

So how has all of this affected the way households spend their money? According to the private credit reference agency, as much as 47% of Filipinos are now cutting their budget for dining out, travel, and entertainment. In contrast, only 22% of households said that they increased their discretionary spending. More Filipinos are also cancelling some of their subscriptions and memberships (21%), including those to digital services (24%).

“Although more Filipinos enjoyed increased household incomes in Q2 2024 and expect this trend to persist in the next 12 months, the adjustments they made to household budgets suggest a cautious approach to financial management,” said TransUnion’s principal of research and consulting for Asia Pacific Weihan Sun. 

“This seemingly contradicting sentiment suggests a vigilant yet hopeful outlook as Filipinos continue to acclimate to economic challenges, navigating between necessary expenditures and financial prudence.”

Credit: A vital, elusive lifeline

The TransUnion study reveals that 63% of Filipinos consider access to credit and lending products to be crucial for achieving their financial goals, up from 56% the previous year. This sentiment is particularly strong among younger generations, with 69% of Gen Z — those aged 18 to 26 years old — and 66% of millennials — 27 to 42 years old — emphasizing its importance. Previously, a 2023 TransUnion study showed that Filipinos shied away from credit because of the “utang (debt)” stigma.

But despite the perceived importance of credit, not everyone has access to it. Only 38% of those surveyed felt they had sufficient access to credit, a slight decline from the previous year.  

The generational differences in credit access and confidence are particularly telling. While millennials have seen a slight improvement in their ability to secure credit (up from 39% in Q2 2023 to 41% in Q2 2024), access to credit for Gen Zs has fallen from 38% in the same period last year to the current 33%. Among generations, Gen Zs also have the lowest confidence (51%) that they can obtain approval for the credit or lending product that they need. 

Credit product preferences also varied among generations, with personal loans being the most popular (67%) with baby boomers — those aged 59 years old and above. Meanwhile, 41% of millennials showed a strong interest in buy now, pay later services , and 37% of Gen Zs said they had plans to apply for a credit card. ⁠⁠⁠⁠– Rappler.com

Finterest is Rappler’s series that demystifies the world of money and gives practical advice on how to manage your personal finance.