Manila, Philippines

5 Ways Pinoys Fix Unexpected Money Problems

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Majority of the Filipino population live below the poverty line, with most of the working or middle class living from paycheck to paycheck. Only two of out ten people have bank accounts with 92.8 percent of households cited the reason for a lack of deposit account was not having enough money to maintain it. Less than five percent are issued credit cards and nine of out ten Filipinos do not even have emergency funds in place (source).

The statistics above clearly show that in the event of unexpected money problems, Filipinos do not have anything saved “for the rainy day”. But how do Pinoys, known for leaving their situation up to fate (bahala na mentality), come up with solutions to their unexpected money problems?

Ask help from relatives.

This is usually the first course of action when Pinoys encounter money problems. Since most of them do not have credit cards, they usually also don’t have the necessary papers to be approved for a short-term personal loan. They seek help from family or relatives first, under the guise of borrowing but truthfully more often than not, these do not get paid at all.

While this is a great proof of how tightly-knit Pinoy families are and how easy they extend help when needed, this can also lead to rifts between family members or relatives, especially when two things happen: 1) the borrower doesn’t get the money he needs or 2) the lender (relative) doesn’t get paid.

Borrow from moneylenders.

Moneylenders are also called loan sharks and have a credit/loan system commonly known as five-six. You would be surprised how rampant this loan system is, from the poor to the middle (working class). You don’t need to show any proof of financial capability or collateral but as guarantee, they usually ask for one’s ATM or debit card (where one’s salary is credited every payday) so they can withdraw twice a month or weekly payments for the loan. For those without debit cards, moneylenders are consistent in making rounds weekly to collect payments from borrowers.

This is an easy fix but interest rates are really high as moneylenders charge an interest rate of 20 percent over an agreed period of time, hence the name five-six.


Get salary advances from work.

If one’s employer permits salary advances, Pinoys usually take advantage of it during unexpected or emergency money problems. Since there is no interest over a salary advance because you will be getting money paid for your work in advance, this is a great option for those steering clear of additional charges. However, since this is a salary advance, one often finds himself perpetually short on cash if he only relies on his paycheck to cover his monthly expenses.


Apply for personal or government loans.

Pinoy employees who usually have financial documents apply for personal loans from the bank but most usually take advantage of applying for loans from government agencies they regularly get deductions from, particularly the Social Security System (SSS) or the Pag-ibig (HDMI) fund. SSS offers different types of loans brought about by real life contingencies such as sickness, maternity, disability, work injury or for personal use.

Pawn valuable items.

Did you know that around one million Filipinos visit a pawn shop every day despite the interest rates and additional charges? David Margendoff, Chairman and co-founder of says that 72 percent of the Philippine population has been to a pawn shop already; this is proof that Pinoys resort to pawning valuable items when they need to produce cash in emergency situations.

This has been an informal practice ever since, with people often offering their household appliances or even their lot ownership papers in exchange for cash with the preamble that they can “buy back” their property when they can pay back the borrowed cash.

While this is a great solution to meet a short-term cash need, since most pawn shops these days accept mobile phones as a pawnable item, something every Pinoy owns, there is much to be improved in the pawning industry. For one thing, most pawnshop branches are not dispersed as ideally as possible, with few locations far in between. Appraisal rates are also not consistent in between branches.

Failing to pay the pawned item on time will also result to the owner losing the item, though most pawn shops have extended claim dates with additional interest.


Pinoys need to get better at managing their money

To avoid falling into frequent unexpected money problems or cash shortages, Pinoys need to get better at managing their money. This calls for a change in mindset, which is another topic to discuss altogether. Setting up an emergency fund, or one’s three to six months’ worth of living expenses, in a savings account will do wonders in solving Pinoys’ money problems – hospitalization, tuition fees, etc.

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About the Contributing Author

Carol Soriano is a consultant for, the very first online pawnshop in the Philippines. A writer at heart and a social media enthusiast, she finds personal finance, investment and money matters interesting topics.

 Filipino Personal Finance

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