POVERTY
BAUTISTA III, Ariston O.
BIO, Pauleneah May B.
DE BELEN, John Nelson
DELA PENA, Janine G.
GOM-OS, Vincent D.
JAMANDRE, Prince Johnley D.
Economic Development
Ms. Lea de Guzman
I. INTRODUCTION TO THE ECONOMIC PROBLEM
Poverty is one of the biggest problems in the world today, as it has been in the past. By its
very definition, it means that people do not have enough money or resources to meet their basic
needs like food, water, shelter, and so on. It has become a hindrance for those experiencing it
simply to live life. When people live in poverty, they often struggle to survive and cannot enjoy
the quality of life they need. On a serious note, poverty is not just about being poor, but it also
leads to hunger, sickness, lack of education, and even violence in some areas.
Globally, millions of people still live in extreme poverty, especially in developing countries.
Many of them live on less than $2.15 per day (122.86 pesos, as of now), according to the World
Bank (2025), which is the international poverty line set by them. In this case, it shows that
poverty is not just a personal problem, but a big issue that affects whole communities and
countries, especially in the Sub-Saharan Africa region, which ranks number one in extreme
poverty worldwide. It also slows down economic growth because people who live in poverty
cannot contribute much to the economy (Turrey et al., 2018).
In the Philippines, poverty remains a serious concern. Although the government has made
efforts to reduce it, many families still live with low incomes, poor housing, and limited access to
education and jobs. According to Rappler, around 15.5 million Filipino families considered
themselves poor, citing Social Weather Stations (SWS). This means that millions of Filipinos still
lack basic needs to live a decent life. Natural disasters, unemployment, and rising prices of goods
make the situation even harder for poor families.
Specifically, in the Philippines, many families, especially those with low income, face serious
financial problems. These families often struggle just to meet their daily needs like food,
electricity, rent, and transportation. Because of this, education becomes a lower priority, as
school fees, uniforms, and supplies can be too expensive. Some children even stop going to
school to help their parents earn money (Meza-Cordero et al., 2025). This makes it harder for
these families to break free from poverty, as education is one of the best ways to improve their
future. When financial struggles continue, it affects not only the present needs of the household
but also the long-term dreams of their children.
Many poor families in the Philippines struggle with managing their finances because of low
income and limited access to quality education. Without this basic knowledge in budgeting,
saving, and spending wisely, it becomes harder for them to improve their daily lives. Children
from these families are also affected, as their future depends on the financial decisions made at
home. These challenges highlight the need to understand the connection between poverty and
financial illiteracy. By learning more about these issues, there is a chance to find ways to help
families handle money better and support their children's education.
II. COUNTRY UNDER STUDY (PHILIPPINES)
Poverty in the Philippines remains one of the country’s most urgent social and economic
issues. According to recent assessments, a significant segment of the population, estimated
between 16.7 and 20 million Filipinos, live below the poverty line, with poverty rates remaining
high due to persistent structural barriers (Bai, 2023). One of the most critical, yet often
underappreciated, drivers of this multidimensional poverty is the lack of equitable access to
quality education.
For millions of Filipino families, education is an unaffordable luxury. The high incidence of
poverty forces many parents to prioritize immediate economic needs over their children’s
schooling. As a result, children from poor households are often compelled to leave school
prematurely to work and augment family incomes, in effect perpetuating a generational cycle of
poverty. Data show that only 7 out of 10 Filipino children finish elementary school, with fewer
advancing to high school or tertiary education (Meron, n.d.). This situation is particularly dire in
rural areas, where poverty and the lack of educational infrastructure are most pronounced.
The Philippine Institute for Development Studies (PIDS) has identified educational
attainment as a critical determinant in breaking the cycle of poverty. Their research demonstrates
that achieving a high school diploma significantly lowers the likelihood of experiencing chronic
poverty, especially in rural communities. More strikingly, attaining tertiary education increases
the probability of escaping chronic poverty by over 700% in urban areas and nearly 300% in
rural areas. However, for low-income families, secondary and tertiary education remain largely
inaccessible due to both direct costs (fees, supplies, uniforms) and indirect costs (transportation,
opportunity cost of lost wages) (PIDS: Education Remains Key Factor Against Chronic Poverty,
n. d.).
Beyond household limitations, systemic issues further constrain educational outcomes in the
Philippines. Underinvestment in public education, outdated curricula, overcrowded classrooms,
and a shortage of trained teachers have contributed to declining quality and poor learning
achievement (Denya, 2025). Disparities in digital access, particularly exposed during the shift to
online learning post-pandemic, leave the most vulnerable children even further behind
(Fernandez, 2023). Functionally, about 24 million Filipinos between 10 and 64 years old are
classified as functionally illiterate, with millions more struggling with foundational skills in
reading, arithmetic, and comprehension.
The lack of quality education is intricately linked to low levels of financial literacy among
Filipinos. Studies by the Bangko Sentral ng Pilipinas (BSP) and the World Bank indicate that
Filipino adults can, on average, answer only three out of seven core questions on financial
literacy, with only 2% able to answer all questions correctly (Lukas, 2018). Financial illiteracy
stems directly from limited access to both formal schooling and specialized financial education,
which is rarely integrated into school curricula.
Low-income families, for whom disposable income is scarce, are less likely to seek or
value financial education, placing their children at a greater disadvantage. The result is an adult
population with inadequate understanding of basic financial concepts such as budgeting, saving,
and investment (Inquiro, 2025). This lack of knowledge translates into poor financial habits,
limited use of financial services, and an inability to make informed economic decisions, factors
that further entrench families in poverty.
