Financial freedom with OFW remittances

There are a number of Filipinos who have worked abroad and come home to “retire” to some decent level of comfort and affluence. Some have used their hard-earned money as capital to start modest businesses, while others have simply invested them in safe financial instruments. Well and good.

However, there are more Filipinos who have not been as prudent. At the end of their contract, the first thing they do is to make sure that they are renewed for a job abroad, or look for new opportunities that will bring them to another overseas assignment.

This is because there is nothing much that remains from their years of working abroad. And in some instances, there is more debt that had been accumulated through wanton and irresponsible spending both by the overseas Filipino worker (OFW) abroad and his family at home.

With the Christmas holidays on us, OFW remittances are expected to spike once again as millions of our countrymen working abroad send home more than the usual amount of money for their kin who need the extra amount to prepare for gift-giving and other celebration spending.

Poor personal finance practices

In many instances, the OFW also spends more abroad by buying gifts for their relatives here. And in cases where the OFW does not have the cash to spend, they fall for the temptation to “max out” their credit cards. This becomes a vicious cycle as they will have to pay for this wanton spending the whole year, and borrow again for the next Christmas season.

Credit cards, which are easily obtained by our OFWs abroad, have been abused to the point that some card holders have five or more that are being used at the same time for installment purchases, or worse, “maintained” through interest payments only.

Poor personal financial management has been a key problem of our OFWs and their families at home for decades now, and the interventions introduced by the government have still been wanting despite the many programs currently running.

The Philippines is ranked as the third biggest recipient of remittances, and yet more than half of the families dependent on remittances do not apportion any amount to savings. In fact, four of five Filipinos still do not have a savings account.

Consumer economy

Since the Philippine government had started its overseas employment program almost 40 years ago, the number of Filipinos working abroad had increased to more than 10 million today, or roughly 10 percent of the total population, while remittances have steadily grown, with 2012 figures at an astounding $23 billion level.

These remittances have been the saving grace of the national economy even during the years when Asia and the world were undergoing a financial crisis. Filipinos at home were able to send their children to school, buy food for the table, and pay for shelter.

But the quality of life of many families has not really improved substantially despite the fact that many of their OFW family members had spent a major part of their productive lives abroad slaving for their foreign employer.

As many studies tracking Filipino migrant families’ economic well-being have pointed out, OFWs and their families are ill-prepared to handle their new-found financial bonanzas. And many still do not fully realize that these migrant jobs offer temporary employment.

Even with this tragedy, it’s not too late to do something, as some non-profit organizations are doing. The earnings repatriated to families here are still substantial, and given proper guidance, may become a powerful tool for economic growth.

Be wise and beware of get-rich-quick schemes

In the meantime, here are some tips for our OFWs as well as their families this coming season.

First and most important is to live within your means. Be frugal. Simply said, this means that if there has been no money set aside for the holiday spending, then everyone in the family should just brace for a lean and frugal Christmas and New Year celebration.

More importantly, stop buying on credit (or utang) just so that there will be gifts to give away and expensive food for Christmas and New Year’s days.

This is easier said than done, knowing how much Filipinos value the upcoming festivities. But this kind of discipline is an important start to a much-deserved financial freedom and stability in future years.

The second reminder is to draw up a financial plan or a goal, short-term and long-term, with all members of the family participating in it. Be wise. This is a good way of making everyone realize that the money earned abroad is not to be squandered away especially if there is no long-term assurance of employment.

The financial plan should apportion money to be saved after removing all the essential spending (food, clothing, shelter, education, mobility), as well as spelling out where the saved money will go (investments, college education, house and lot, etc.).

Seek professional advice on the soundness of your financial plan, and what best to do with your savings. This is a good way to avoid risky investments in instant get-rich schemes that have victimized a lot of people, including retired teachers and other professionals.

Champion League (PCCL) games for charity

Part of the year-end activities and highlight of Champions League (PCCL) National Collegiate championship games are a series of benefit games featuring top junior teams of the country. Proceeds of the games are donated to the ABS-CBN Foundation headed by Gina Lopez for the foundation’s various projects.

Today, Dec. 3, UAAP Junior Division champion National U Bullpups and Tiong Lian champion Hope Christian High School will play at 2 p.m. at Ynares Sports Gym, Pasig City, serving as appetizer for the Luzon-Metro Manila Sweet 16 bracket championship.

The other participating team in this worthy endeavor is NCAA Juniors runner-up La Salle Greenhills, which will see action during the games on Dec. 16 and 17 at FilOil Flying V Arena, San Juan City.

ABS-CBN will air live these games over Studio 23 starting at 2 p.m.

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.