A key part of these decisions is building a financial safety net, ensuring families are emotionally, physically, and financially prepared for parenthood and life's milestones. This is now recognized as a crucial element of the national financial inclusion strategy, as highlighted by the Financial Inclusion Steering Committee (FISC) under the Bangko Sentral ng Pilipinas (BSP) in their National Strategy for Financial Inclusion 2022-2028.
The strategy highlights the need for individuals to handle emergencies and feel secure about their financial future. A financial safety net—comprising savings, insurance, government programs, and other tools—protects families from financial hardships during unexpected events like job loss or illness, preventing strain and aiding quicker recovery.
Building a financial safety net goes beyond saving—it's about having extra resources to maintain stability during life's uncertainties without depleting your savings. Key benefits include:
● Protection against unexpected events: A safety net prevents financial hardship from emergencies like medical issues or unemployment, allowing you to tackle challenges without falling into debt.
● Peace of mind: It reduces worry, providing confidence that you can manage life's unpredictabilities without relying on loans, freeing you to focus on growth.
● Financial empowerment: A safety net keeps you in control, avoiding the need to borrow or dip into long-term savings, ensuring you stay on track with your financial goals.
Once your essential savings are in place, you can explore key financial safety nets like:
● Emergency Savings Fund: A dedicated account for unexpected expenses like medical emergencies or job loss. This fund provides immediate access to cash, reducing reliance on credit. According to 2023 Consumer Expectations Survey (CES), about 34% of Filipino households can save for emergencies, with 32.9% already having savings.
● Insurance: Health, life, disability, and property insurance protect against major financial losses, helping families maintain stability during unexpected events.
● Investments: Beyond emergency funds and insurance, investing in stocks, bonds, real estate, or mutual funds grows your wealth over time.
● Retirement Funds: In the Philippines, pension plans from the government and self-funded retirement insurance can help build savings for a secure retirement. As of December 2020, the Social Security System (SSS) had 38.8 million members, while PAG-IBIG had 15.93 million active members in 2024.
It's important to remember that a financial safety net should be used wisely. While emergency funds provide immediate access to cash for urgent needs, other safety nets like insurance and retirement funds are less accessible. When planning your investments in these areas, balance your overall financial needs to ensure you can still cover your daily expenses.
Another option for Filipinos is Pru Life UK’s PRULifetime Income, a traditional insurance product offering a guaranteed 5% annual payout for life and 200% lifetime protection for the family1. This policy provides a steady annual payout to support family needs and offers comprehensive coverage with double protection until age 100. With coverage starting at just P250,000, it’s ideal for parents saving for their child's education, individuals planning major expenses or travel, and those securing their retirement. For more details, visit www.prulifeuk.com.ph.
1 Guaranteed 5% annual cash payout and 200% insurance coverage based on sum assured. Annual payout is payable from the end of the 6th policy year until maturity if the insured is alive during the payout dates. Product terms & conditions apply. Policyowner & insured should be in the Philippines at the time of sale.
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