According to a survey done by the Singapore-Manila Branch of the Nomura Research Institute (NRI), middle-class Gen Zs and Millennials in Metro Manila have been increasingly concerned about the effects of inflation during the second quarter of 2023. The poll, which was performed in May and June, found that an astounding 94% of participants experienced inflation during this time.
These young adults have had to reduce their non-essential spending, such as leisure and entertainment prices, due to the rising costs of vital products and services like food, transportation, fuel, and utilities. Following transportation and fuel prices at 15% and utilities like power, water, and internet bills at 14%, the respondents (60%) said that their food and beverage expenses had been the most affected by the ongoing price hikes. Additionally, a staggering 83% of participants claimed to have cut back on non-essential purchases, while 79% felt it necessary to limit spending on entertainment and leisure activities.
The survey also highlighted the financial challenges faced by this demographic. Approximately one-third of respondents (32%) reported being unable to save over the past 6 to 12 months. For those who managed to save, 44% saved a lower percentage of their income. The persistent inflationary pressures have led 38% of respondents to adjust their savings goals by either reducing the target amount or delaying their timelines. Similarly, 47% of participants had to make similar adjustments to their savings plans.
To cope with the financial strain, a significant number of respondents have turned to loans. Of the surveyed individuals, 71% reported having outstanding loans. In an attempt to augment their incomes, 43% of respondents resorted to taking out additional loans in the past year. Among those who already had loans, 58% had to cut back on other expenses to meet their loan obligations, while 19% were forced to delay payments. The survey also revealed that 41% of respondents possessed credit cards. Personal loans were the most prevalent type of loan, accounting for 30% of respondents, followed by alternative installment loans and salary loans, each representing 19% respectively.
Regarding investments, 52% of respondents had existing investment portfolios. Among these, mutual funds and stocks were the top investment products, chosen by 18% of participants each. However, due to the inflationary pressures, 12% of respondents had to partially liquidate their holdings for increased liquidity, and a minimal 1% sold off their entire investment portfolio.
Given the challenges posed by inflation, respondents have adopted a diverse array of coping strategies. A notable 94% expressed concerns that continuous price increases would persist over the next 6 to 12 months. Consequently, 91% of participants felt the need to explore additional income streams. To adjust to the current economic situation, 86% of respondents planned to continue cutting back on expenses, while 73% intended to reduce their spending on entertainment and leisure activities.
In terms of savings, 34% of participants expressed plans to increase their savings allocations to better prepare for the future, while 33% aimed to maintain their current savings pattern. However, 16% of respondents planned to reduce their monthly savings allocation due to inflationary pressures.
The survey also shed light on borrowing habits, with 46% of respondents indicating that they were less likely to take out loans, while 28% stated they were more likely to acquire additional loans.
Regarding investments, 12% expressed a desire to explore risky investments in the hopes of achieving high returns over the next 6 to 12 months. Meanwhile, 40% were considering more conservative options. Notably, 30% stated that they would choose to stay away from investing altogether, while 18% aimed to maintain liquidity.
295 persons from Metro Manila participated in the online poll run by the NRI Singapore-Manila Branch, including 203 middle-class Millennials and 92 members of the Gen Z generation. Individual participant incomes per month ranged from PHP 13,000 to PHP 41,000 and PHP 41,001 to PHP 163,000.
It is evident that middle-class Gen Zs and Millennials in Metro Manila are actively looking for solutions to handle these issues and safeguard their financial futures as inflation continues to have an influence on their everyday lives and financial well-being.
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