Monday, April 14, 2008

OFW Financial Planning

Called bagong bayani (new heroes) by our government, millions of them leave for abroad yearly to seek better job opportunities that they could only dream of having in their own country, they are called OFWs and they are the biggest contributors to our economy today. A lot of lives has been uplifted by the money sent home by our modern heroes. But it's not just important to keep sending money back home. Their families must also be educated on how to properly use or invest their money.

Most OFW families don’t know what to do with the sudden influx of money. Some immediately buy a new car, a house or go on expensive shopping sprees thinking that the money remitted will never end, never giving a second though and asking the questions what if my husband, wife, son or daughter lost their jobs overseas? Will we be able to continue paying for our monthly amortizations? Without thinking things through, most will loose their properties as fast as they got them. It is not enough for us just to earn and earn, we must also have the financial literacy to properly manage our finances. Here are some tips that can help guide the OFW in financial planning with their family.

1.) Before anything else, the OFW must clearly state to their family that the funds he or she is sending should only be used for necessities like rent, food, medical, educational and various emergency needs. The money sent home should not be used for throwing barangay size parties, shopping sprees or gambling money for tatay, nanay, ate or kuya.

2.) When planning to buy big ticket items like a car or a house, have enough savings first to cover at least 5 to 6 months worth of monthly amortizations just in case the OFW lost his or her job. This is very important unless you want the bank to repossess your properties. Just remember that it only takes 3 months of delinquency for the bank to begin taking steps to obtain your property.

3.) This may sound mean, but it's practical. If you don't think your family will use the money you sent home wisely. Open 2 savings account and don't tell anyone about your other account then remit part of your earnings there. Trust me, the remittance fees are a small price to pay to guarantee that there will be some money left when you get home.


ka edong said...

Good tip there on creating a buffer to cover amortizations in case the OFW loses his/her job. ;-)

It's also important to sit with the family and establish the family's financial goals. Financial freedom must be a team effort, not a burden on the OFW alone.

ka edong

Anonymous said...

GREAT! Thank you very much!

Dubai, UAE

Anonymous said...

More more more! thanks again

Garry Garcia said...

The 3rd advice is indeed very important. But I suggest if you can open a savings account in the country you are working . Reasons are

1) the smaller the amount you remit the lower the funds

2) Your interest would be in dollars or Euro.

3) You have access to your cash in case of your own emergency.

4) You build a credit history in that country.