Monday, May 8, 2017

8 money mistakes why OFWs are struggling financially

We often hear Overseas Filipino Workers (OFWs) as modern-day heroes because of their hard work and sacrifices. Their cash remittance is no doubt one of the major reasons why the Philippine economy is growing. However, the ultimate challenge for most OFWs is how to handle their own finances.
Unfortunately, one out of 10 OFWs are financially broke, according to a 2011 study conducted by Social Enterprise Development Partnerships Inc. In addition, eight out of 10 of those who return to the Philippines have no savings. Despite working abroad for many years, few are able to save substantial amount of income.
The question is why? If you are an OFW aiming for financial success, here are eight money mistakes you might want to avoid:
1. Some OFWs don't treat savings as an expense
Being OFWs in Thailand, the first thing my wife and I do with our salary is pay the bills, and ensure we pay them on time. The rent, internet bills, house amortization in the Philippines, electricity bills, car loan, and others are the first things we take care of. However, we don’t include savings in our expenses. In other words, we save only on whatever is left after paying all the bills. If nothing is leftover, we have no savings at all.
However, the best way to break this habit is to pay yourself first. Of course, this is after returning your tithes to God. Today, my wife and I treat savings as part of the expenses. Normally, we diversify by putting money into stock market and mutual funds every month.
2. Failure to define asset versus liability
Because many OFWs fail to define asset versus liability, they often purchase liabilities, which they think is an asset. Robert Kiyosaki emphasized asset as anything that puts money in your pocket, while liability takes money from your pocket. An asset generally increases its value over time or it has a potential to gain yields in the future.
An example of a good asset is when you purchase a real estate or condo unit that can translate into rental business. However, you need to consider several factors such as the location, time frame of finding a renter, the reputation of the developer, and the payment or financing options before you make the big decision of buying a unit.
3. Get-rich-quick-scheme attitude
One common money mistake for OFW is they put their hard-earned money in the wrong kind of investment instruments. They are tempted by the high returns, even in such a short period of time. You must be cautious when an offer is too good to be true; because unfortunately, it’s probably not true.
King Solomon reminded us one important principle of money management, "Dishonest money dwindles away, but whoever gathers money little by little makes it grow” (Proverbs 13:11).
4. OFWs as milking cow
There is nothing wrong with helping your loved ones. However, your family members back home should not be too financially dependent on you just to be keeping up with the Joneses.
It’s important how to say no unless it’s an emergency that demands your financial support.  Learn to save for yourself and avoid over-remitting. You will not be a burden to your loved ones when you retire financially stable.  Remember, planning for your own future is also one way of helping not just yourself but the family as well.
5. The nakakahiya mentality
Imagine an old high school friend comes to see and offer you something. This could be clothing, books, gadgets, or any other business ventures. Because it's nakakahiyang hindi kumuha or omorder, you find a hard time saying “no” even though your budget is tight.
Helping loved ones is quite okay; but if it happens many times, the nakakahiya mentality can certainly affect your budgeting and eventually ruin your finances in the long run.
6. Lack of knowledge how to invest

There are many investment opportunities for OFWs including real estate, trust funds, business ventures, mutual funds, stock market, bonds, and others. However, they do not invest due to lack of knowledge. On the other hand, some OFWs have the desire to invest but they don't know where and how to start.
I believe financial education should be the first priority of any OFW. Once they have the knowledge, they will be able to put their hard-earned money in the right investment instruments. Furthermore, financial literacy is the best weapon against any form of scam or other related fraudulent investment scheme.
7. Lack of financial goals
It’s essential for OFWs to plan ahead. If you want to buy a house and lot, put up a small business, or help your siblings finish college, you have to set goals. Regardless of the intended number of years working abroad, setting realistic financial goals will put you in a right direction and avoid wasting a great deal of time as you work overseas.
OFWs must take advantage of saving or investing while still receiving better wages.
8. OFWs have no emergency fund  
Not having an emergency fund is another reason why many OFWs are struggling financially. They become devastated when emergencies happen such as critical illness, being laid off from work, and other unforeseen emergencies either in the Philippines or abroad.
Due to a lack of emergency funds, they are obliged to borrow money from their friends, or even take a loan from their company. As the interest rate is usually high, they feel the financial crunch later on.
Avoiding these money mistakes and making the most out of your hard-earned cash while working in a foreign land will help stabilize both your present and future financial outlook. 
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Jun Amparo is a personal finance advocate and founder of Richly Blessed Today. He is an OFW currently working as a school counselor in an international school in Thailand. To learn more about proper money management, please visit his blog www.richlyblessedtoday.com

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