10 Bad Financial Habits of Many Filipino’s That Must Be Changed

Successful and wealthy people did not just suddenly become rich and successful (except for lottery winners). More so, keeping success and wealth is achieved not by accident but with discipline and proper money-habits. Self-made wealthy people build their success over plenty of years, and discipline. 

Unfortunately for us, Filipinos, a number of our traditional or customary norms are incompatible with the basic principles of personal economy or the idea of managing one’s personal financial health.

In this article, we have compile ten spending habits that will prevent you from achieving your financial independence and success.

1. Spending on impulse.

Going to the supermarket or the department store without a To-Buy list would most probably cause you to buy anything desirable you see in the stores. Spontaneous spending is a bad, tempting habit. This is a habit most of us is guilty of.

This is especially tempting if you are using your credit card on a daily basis! Using your credit card to make ordinary purchases is a bad money habit.

To avoid irrationally splurging, plan your spending beforehand and stick with your spending plan. Make a TO-BUY List before you head out to the supermarket and stick to it.

2. Using your credit card even for ordinary purchases.

Buying something above your means is a dangerous financial behavior. Why buy something ordinary that you cannot buy through cash?

Credit cards are only good for large investment purchases (e.g. you bought a laptop and a mobile wifi so you could do your freelance work more anywhere you go) you could pay staggeredly.

Remember that credit card debt is the third cause of bankruptcy, other than job loss, and medical cost.

3. Spending more than 25% of your net income on housing costs or rent.

Housing costs include rent, mortgage, real estate taxes, utilities, insurance, repairs, and maintenance. The conventional wisdom on how much of your income you should spend on housing has gone unchallenged for nearly half a century and the conventional wisdom of spending only up to 30 percent of your income on rent has originated from the United States.

In 1969, then-Sen. Edward Brooke (R-Mass.) passed a law that became known as the Brooke Amendment to make housing more affordable by tying the cost of rent to income. The law capped rent in public housing at 25 percent of residents’ income. In 1981, the Reagan administration, under budget constraints, bumped it up to 30 percent.

And so, for decades now, everyone from your grandmother to personal finance columnists has pegged the ideal cost of rent or a mortgage at 30 percent of after-tax income.

But for our context, a developing country, 25% is a decent ceiling rate on budget for housing.

4. Spending more than 15% of your net income on food.

This includes groceries and does not include prepared food. Prepared food is part of your entertainment budget. So, if you do not want to be bankrupt, and not to mention fat, mind how you spend money on groceries. Buying wholesale instead of retail purchases could save you a lot of money, so if you intend to buy some groceries, buy them in large amount or quantity.

5. Spending more than 10% of your net income on entertainment/gifts.

This category includes bars, restaurants, movies, music, books, gifts, etc. We understand you need a social life, but if it means risking your financial stability, you have to contain your social spending for you might not be able to socialise anymore once you go bankrupt.  Also, eating out and any prepared food you purchase is part of your entertainment budget.

6. Spending more than 5% of your net income on car expenses.

Car expenses include a lease, loan, insurance, gas, tolls, registration fees, repairs, and maintenance. Avoid fancy car makeovers or upgrades which you do not actually need.

And also, getting a car is not really a good investment. Why? Because the value of a car depreciates the moment you take it out of the car depot’s garage door.

Unless you are going to use the car for business, it’s generally not a good investment. It’s a cost center in other words — cost centers just incur costs and nothing else, just cost.

7. Spending more than 5% of your net income on vacations.

We all love to travel and chill, and break free from the depressing 8-hour daily work. But if you are planning a vacation which could potentially hurt your pocket, rethink it, it might not be a good idea.

Chilling for a time but breaking your pocket in the process will offset the pleasurable experience you have had. You might spend the remaining of your days thinking about how to bounce back from being cash-strapped.

8. Spending any money on gambling.

Gambling it tempting because if you are lucky enough, you could double, or even triple your bets. But gambling has caused many bankruptcy. If you want to double your profit or income, learn to invest in other profound and worthwhile activities. Not gambling. Definitely, not gambling.

9. Going over the top on gift-giving.

Gift-giving and “pasalubongs” is deeply entrenched in the Filipino culture. It is almost always customary that once you visit your relatives, you have to have something to give to your cousins, nephews and nieces, and siblings (even to your close friends).

However, keep in mind, allot only 10% of your budget for gifts. Do not go overboard.

10. Spending more than 5% of your net income on clothing.

We understand that you have to look good all the time. But be practical. You can buy quality clothes at discounted prices. You do not have to buy expensive signature brands when there are equally high-quality substitute brands.

Final Words

Your personal economy is the most important economy of all. Unstable personal finance might take its toll on you when unexpected expenses come your way (e.g. medical expenses, accidents, and economic depression). So, maintain a budget, stick with it, and track your expenses. Analyse your previous expenses and discern each spending whether it’s a necessary spending or an unwise spending. Unwise spending decisions should not be repeated.

Yes we know, getting control over our spending is not a walk-in-the-park task. However, once it becomes a habit, it will get much easier.


Abello, J. (2014). 14 Bad Habits that Filipinos should Break to Achieve Progress – FAQ.ph. [online] Faq.ph. Available at: http://faq.ph/14-bad-habits-that-filipinos-should-break-to-achieve-progress/ [Accessed 13 Jun. 2017].

Ready To Be Rich. (2017). 7 Bad Money Habits That Pinoys Must Stop Doing. [online] Available at: https://fitzvillafuerte.com/7-bad-money-habits-pinoys-must-stop.html [Accessed 13 Jun. 2017].

Elkins, K. (2017). 11 bad money habits to break before 30. [online] CNBC. Available at: http://www.cnbc.com/2017/02/13/11-bad-money-habits-to-break-before-30.html [Accessed 13 Jun. 2017].

The Sulit Blog. (2015). Breaking Bad Money Habits. [online] Available at: https://www.sulit.ph/blog/breaking-bad-money-habits/ [Accessed 13 Jun. 2017].

Beard, S. (2017). How Much of Your Money Should You Be Spending on Rent?. [online] The Cheat Sheet. Available at: http://www.cheatsheet.com/money-career/how-much-of-your-money-should-you-be-spending-on-rent.html/?a=viewall [Accessed 13 Jun. 2017].

Asia, M. and Matters, B. (2013). Getting past bad money habits. [online] Sg.style.yahoo.com. Available at: https://sg.style.yahoo.com/getting-past-bad-money-habits-080225134.html [Accessed 13 Jun. 2017].

Leave a Reply