MANILA, Philippines – There’s no doubt about it - remittances from Overseas Filipino Workers (OFWs) keep the economy afloat.
But working abroad is not always easy. The increase in income often comes with various risks and the pain of being away from family. (READ: 'What you need to know about overseas Filipino workers' )
According to Vince Rapisura, president of the Social Enterprise Development Partnerships, Inc, temporary economic migrants should make it a goal to be able to come back within 10 years.
3 stages of the migration process
According to Vince, OFWs should ideally go through the following migration process:
- Beginning stage (1-2 years) - For the first two years, the migrant should work on paying off the debts he/she incurred to be able to work abroad. (ie. money spent for plane tickets, processing fees, etc.)
- Medium term (2-3 years) - During the medium term, the migrant’s focus should be to provide for his/her family’s basic needs.
- Long term (3-5 years) - The migrant’s last years, meanwhile, should be spent for their financial goals like being able to buy a house, open a business, among others.
Coming home earlier
Then again, you don't have to wait for 10 years to reach your financial goals.
Vince says that for an OFW to be ready to come home earlier, he or she set clear financial goals before leaving.
Many OFWs fail to do this, causing them to overstay abroad.
Before you start packing your bags, it’s important that you and your family understand why you have to leave and what you are trying to achieve.
Just as important is being able to stick with your goals.
"When they go there, initially they say, 'I only want a tricycle as a business,' and send my children to school.' After 5 years and they've already attained that, the goal would shift somewhere else. Maybe the tricycle is now a jeepney, and sending the children to school is finished and now they want to put up a house," Rapisura explained.
Changing goals is not necessarily a bad thing, but having no definite end-goal contributes to OFWs overstaying abroad.
Teach your family to be independent
According to Vince, families also need to understand that reaching financial goals is not the OFW’s burden alone.
Ideally, the family left behind should be able to provide income and not just depend on the OFW’s remittances.
The income that family members at home make should be able to cover the household’s basic needs and expenses while the OFW’s income funds their family’s ultimate financial goals – building a house, opening a business, or sending the kids to school.
By doing so, families not only get to reach their financial goals faster, but are also able to maintain their lifestyle. According to Vince, many OFWs fail to save because their families suddenly change their lifestyle, ultimately increasing expenses. This happens when the OFW provides them with more than they actually need.
Budgeting your money
About half of OFWs claim that they save, but only 1 out 5 save for emergencies adequately. Vince also shared that OFWs do budget, but their budgeting is focused mainly on immediate consumption, not on investments or other financial goals.
As a guide, Vince suggests that OFWs follow the 5-15-20-60 budgeting rule, with 5% of income going to insurance premium, 15% to savings, 20% to investments, and 60% to expenses.
Effective budgeting means being able reach your financial goals faster and ultimately, being capable of returning home for good.
#UsapangPera
To help even more OFWs and young professionals manage their finances better, SEDPI produces weekly webisodes featuring Vince and beauty queen Venus Raj entitled #UsapangPera.
The sixth episode will be released on Friday, September 2 at 7pm. Bookmark this page and watch it here on Rappler! – Rappler.com
More #OFWtips:
- #OFWTips: Are you financially literate? Take this quiz!
- #OFWTips: Planning to invest? Protect yourself from investment scams
- #OFWTips: Love, money and making both work
- #OFWTips: Getting out of bad debt
- Are you an OFW? Here are bad spending habits you need to break
- OFWs on money spending: Learn to say ‘no’ to extended family
SEDPI is a Philippine-based capacity-builder in the fields of microfinance, social entrepreneurship, and financial literacy. Learn more about them here.
Got questions for SEDPI about managing your finances? Email us at balikbayan@rappler.com.