Are you willing to spend or save up on your hard-earned bonus this upcoming holiday season? This is a lingering question in the minds of many Filipinos during these economically challenging times.
Notably, household consumption (or consumer spending in layman's terms), generally defined as the value of all goods and services purchased by households, is a key indicator of a community's living standards and subsequently a country's economic health. With this rationale, one has a high level of economic well-being if he/she has a high level of consumption.
As a matter of fact, the recent figures released in November 09, 2023 by the National Economic Development Authority (NEDA) for the third quarter of 2023, household consumption posted a weak 5 percent growth due to high food inflation even though the Philippine economy grew by 5.9 percent during the same period.
In addition, household consumption has been on a quarterly downward trend since Quarter 1 of 2022 when it was at a high of 10 percent or equivalent to twice the current growth rate.
Fundamentally, there are many determinants as to why consumers tend to spend more or less. Perhaps, the most important one is disposable income. Looking at it on one hand, a potential solution is to increase wages to subsequently increase one's capacity to consume. However, it is important to note that any increase in wages is offset by subsequent price increases in goods and services with companies merely passing on their additional labor cost to the market.
For instance, I went to a supermarket within a month after the daily minimum wage this year was increased from Php 570 to Php 610 and noticed an across-the-board increase in all goods sold. Then, upon probing with select staff, they mentioned that these increases were driven by the minimum wage increase. This minimum wage increase was based on Wage Order No. NCR-24 on 26 June 2023 and took effect on 16 July 2023. However, it is important to consider what happens to those who earn slightly above the minimum wage or higher. Their capacity to spend decreases given the same salary.
As we are all excited to receive our 13th (14th, and 15th month) pays and bonuses in the next few days or weeks, let us first consider how we will financially behave. On one hand, we want to enjoy and celebrate the holidays with good food and exchange gifts. On the other hand, we have financial needs for the present and future which we need to carefully plan out.
Moreover, aside from thinking about what food will be served on the table and what gifts we are planning to buy for our loved ones, we are confronted with the dilemma of spending more versus saving more.
Ultimately, at the end of the day, let us be mindful and let your money work as a tool to increase your happiness and not your stress. Indeed, spend wisely this upcoming holiday season!
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The views and opinions expressed in this column are those of the author. They do not purport to reflect the opinions or views of The Lobbyist.BLOG COMMENTS POWERED BY DISQUS