Money Management April 22, 2026

What is Financial IQ? Insights on Building and Preserving Wealth in the Philippines

Developing a strong financial IQ is the key to growing, managing, and preserving your wealth across different life stages and economic uncertainties.

Financial IQ is the ability to understand and work with money. Robert Kiyosaki, author of the book Rich Dad, Poor Dad, is among those who popularized the term. Financial intelligence, according to Kiyosaki, is the information, knowledge, wisdom, and know-how to understand, manage, and increase wealth.

The Business Manual sat down with JJ Book, head of new market development at insurance company Sun Life of Canada (Philippines), to hear his thoughts on financial IQ from the point of view of someone who has seen how it applies in the Philippine setting.

How Do Experts Define Financial IQ?

Book’s definition of financial IQ is “having the knowledge of how to effectively grow, manage, and preserve wealth across different life stages while being exposed to life's uncertainties.”

This differs from the common misconception that being successful and having a sizeable net worth means one has financial IQ. Wealth and assets can easily be lost if the person does not have the know-how and discipline to take care of finances, Book said.

Discipline is a major part of financial IQ, he said, since knowledge can easily be gathered these days from the Internet and other sources.

If someone cannot stick to a plan, then the knowledge is all for naught.

Financial Knowledge Gaps and Debt Trends in the Philippines

The most common knowledge gaps or bad habits in the Philippines are overlooking the importance of savings and failing to live within one’s means.

Thanks to digital advancements, banks and lending institutions have made getting loans as easy as clicking a button on a device - sometimes even without collateral - in exchange for hefty interest rates.

A quarter (25%) of Filipino adults had outstanding loans in 2025, a decline from 45% in 2021, based on data from the Bangko Sentral ng Pilipinas (BSP)’s 2025 Consumer Finance and Inclusion Survey. Seven in ten adults believe taking out a loan is not a poor idea, yet many continue to rely on borrowing to meet basic needs such as food, education, and health expenses.

The survey also found that online lending platforms expanded their reach, particularly among borrowers seeking faster access, which contributes to a more diversified credit landscape.

This easy access to money, combined with little or no planning on spending, results in people with little savings and a lot of debt, Book said.

Another common issue for Filipinos is the lack of knowledge on the correct financial instrument to use. For instance, people put their money in a savings account or a short-term instrument when they would be better served with a long-term one; this results in gains below inflation levels, which diminishes wealth.

How Different Generations Build Wealth: Boomers, Millennials, and Gen Zs

Generations diverge in their approach to managing wealth, Book said.

Boomers, or those 60 and above, tend to go for traditional instruments such as bonds, as well as tangible assets, such as building a business or investing in real estate for rental income. They focus on having something concrete, whether that be a deed of sale or a stock certificate.

Frequently Asked Questions

What is the definition of Financial IQ according to experts?

JJ Book of Sun Life Philippines defines Financial IQ as the knowledge required to effectively grow, manage, and preserve wealth across different life stages while navigating life’s uncertainties. It is distinct from simply having a high net worth, as true financial intelligence requires the discipline and know-how to maintain assets rather than just acquiring them.

What are the most common financial mistakes seen in the Philippines?

The primary gaps include a lack of consistent savings and a failure to live within one’s means, often exacerbated by the ease of digital lending. Many Filipinos also struggle with selecting the right financial instruments, such as placing long-term funds into low-interest savings accounts that fail to keep pace with inflation, ultimately diminishing their purchasing power.

How do wealth-building strategies differ across generations?

Boomers generally prefer tangible assets like real estate, businesses, and traditional bonds. Millennials are more tech-savvy and inclined toward digital instruments and cryptocurrency, while Gen X typically uses a hybrid approach. In contrast, Gen Z shows high interest in finance but often struggles with debt and a lack of savings due to the influence of social media trends and consumerism.

What does current data reveal about debt and investment in the Philippines?

According to the 2025 BSP survey, the number of Filipino adults with outstanding loans dropped to 25% from 45% in 2021, though many still borrow for basic needs. Investment participation also saw a decline, with only 2 in 10 adults reporting held investments or pension schemes in 2025, compared to 36% four years prior.

How does a high Financial IQ protect an individual during economic crises?

Financial IQ emphasizes preparation before a crisis occurs rather than just reacting to one. By maintaining disciplined savings and insurance coverage, individuals gain the flexibility to navigate rising costs—such as soaring fuel prices—without compromising their long-term stability. Insurance, in particular, serves as a critical tool for income protection and the seamless transfer of wealth to the next generation.

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