Remittance as Harvest: Why Most OFWs Don't Save Money


BY RAYMOND CALBAY

Only two in five overseas Filipino workers are able to save money, according to the Philippine Statistics Authority. This worrying trend continues despite OFWs collectively sending annual remittances to the current tune of $25 billion. Salary abroad is supposed to be much higher, that's why some 10 million Filipinos decided to work in other countries. So why is it that OFWs still can't save and grow money? There may be several unfortunate personal reasons to cite, but the most common one can be summarized by an age-old saying...

"Ubos-ubos biyaya, bukas nakatunganga"

Through this dictum, elder folks warn about spending all your blessings at once. It harks bark to the idea of "harvest" where money is abundant for a period of time. People engage in merriment, feast on the best food, and splurge on wants. Then after a week or two of abundance, it's drought time again - at least financially. The season of poverty extends until the next harvest, and then the cycle of short-lived abundance repeats.

This tired mentality hounds many OFWs even as they land on different parts of the world. As soon as receiving their paychecks, they send a good amount back home to their families. Trouble is, the family treats this as a monthly allowance - a lifestyle upgrade - and not as an investment potential. Similarly, whatever is left from the OFW's salary is spent on gadgets, clothes, and branded goods - stuff of dreams.

And then the reality hits hard: soon enough, their work contracts will expire. Instead of planning to resettle and put up businesses, the only viable plan for many is to apply again for the next overseas job. The usual hurdle of placement fees is sought from high-interest loans. This cycle repeats until the OFW reaches the maximum contract renewal or hits the age ceiling for the industry.

When they finally find themselves home in their barrio with not much options, their families even sometimes resent them for causing their source of cash to dry up.

This is the majority's story. Do you want to be another tragic statistic? If not, then...

Save before you spend

Here's the suggested formula from financial experts: "Income - Savings = Money for Expenses."

The idea is to first secure a portion as your savings before allotting your salary to the usual bills and obligations. From time immemorial, smart farmers practiced this as well to brace for pests, typhoons, and dry spells. Set up a separate bank account for your savings if you want to. For a start, some banks in the Philippines let you open and maintain an account even if you're staying out of the country.

To help you decide how much savings you need, you should be clear about your financial goals. Is it saving up for business capital when you return home in 3 years time? Or putting aside seed money for buying a house and lot? Maybe it's paying off your outstanding debts first? Be specific on a figure, and then work your way to it through savings and investments.

With these goals in mind, watch what you spend on. Instead of Air Jordans, iPhones, and Gucci purses, turn your sights to mutual funds, insurances, and stocks (some are accessible online). Educate yourself with investment instruments available to you as an OFW. Saving up is like planting a seed: growth is really slow, but steady. Investing is planting as much and with more variety so you have more to harvest later on, and at different times.

Need help navigating your financial prospects? Post us your question and we'll help connect you with more information!