You are probably already working abroad.  But you might still welcome a review of all the right things you did and know what you could do to correct mistakes of the past. For readers who have not yet left, this is the chance for you to get ready.

It has been my advocacy to concentrate on teaching financial literacy to income-earning Filipinos.  Fortunately or unfortunately, as an Overseas Filipino Worker (OFW), you are in the majority of Filipinos earning substantial regular income.  I am quite blessed to have been and continue to be able to get to know many of your problems related to financial literacy up close.  It gives me a real sense of accomplishment to be able to assist you in understanding the need to save and to grow your savings so that you may be financially independent when you come back for good to our country.

In the first place, the reasons why you or at least most of OFWs leave their family and go abroad is a combination of the following and not necessarily in order:

1) Lack of appropriate jobs for you locally.  You might have had job opportunities in the Philippines but if you have technical capabilities, you could get a better paying job abroad.  The sense of accomplishment is also a very important part of your life.  If you lose that feeling, it can be very depressing and the nagging thought that you could have done better in life will haunt you till you grow old.

2) Want the experience and adventure abroad.  There is nothing wrong if you are not really there for the sense of accomplishment but for the thrill of being alone abroad and living a different life.  This is true especially if you are still young and single. Hopefully, you can combine work and pleasure.

3) Want for better pay.  I can’t say much more about this.  Everybody wants better pay whether in the country or outside.  I hope you carefully analyzed your net pay.  I hope you don’t fall into the group who thought they were getting higher pay in another country but cost of living and other expenses related to moving away actually gave them a net pay lower than what they would be receiving in the Philippines.

Based on my and the Colayco Foundation for Education (CFE) Team’s personal experience in dealing with OFWs, it seems that at most, only 10-20% would know how to manage and grow their money.  This same ratio probably applies as well to those who stay and work in the Philippines. Personal money management, or applied wealth management is not really taught in schools.  It’s only now that we are seeing our advocacy in promoting financial literacy (personal finance) being brought to schools. A group, which includes CFE is working on an institute to precisely educate teachers who teach finance and economics in investments and personal finance. One of the key and immediate objectives is to reverse the prevailing counter-productive mindset among the earning classes, i.e., the mindset of the “here and now”- the seeming drive to live their chosen lifestyle immediately at any expense up to and including borrowing beyond their means.

Pre-Departure Fundamentals

Before you even leave the country, first and foremost, you should have a personal financial goal.  You should know exactly:

1) How much you are worth today.  You need to make your Personal Statement of Assets and Liabilities and Personal Income & Expense Statements.

2) You should agree with your family left behind what their budget should be and be ready to send only that and no more. Your family should not be tempted to thinking that they can now spend as much as they want just because their OFW is earning in foreign currency.

3) Remember that in making that family budget, you should follow the formula INCOME-SAVINGS= EXPENSES.  It is important that you not only keep some money for your personal expenses abroad but also some savings for yourself

4) You should try your best to follow the 80-20 rule.  You should live within 80% of what you earn and save 20% of your income for your future capital.  If you can’t save 20%  you can start even with 1%.  You just have to get started and feel that winning experience. This will hopefully get you to develop that saving habit.

5) Learn what options you have for saving both here and abroad. You should not just send everything to your family and relatives.  In fact, it is better that you make arrangements for direct placements of your investments with financial institutions before you leave.  In your working country, on the other hand, you should find out the safe methods of keeping your savings.  If you feel confident about investing there over the long term with a reputable financial institution, you could do that.

Your whole end goal should be to come home “for good” with enough saved so that you can sustain a fairly comfortable financial life with your family.  These goals have to be quantified over specific time periods.  You need to monitor your progress and thus should regularly update your personal financial plan.

You might become so homesick and start believing that you have enough saved and that you can easily find a job or business when you come home.  You might start believing that what you have saved will tide you over until you find the job or business.  Unfortunately, many times this might not be a realistic assumption so be very careful

If you still need a job, you should be relatively sure you have that job before coming home for good. If you dream of getting into business, you should prepare for the business that you intend to get into.  You should prepare together with your family in identifying what business you will get into, thoroughly study the identified business and have a complete plan in how to set it up and start operations.  Ideally, the business should already be running even before you give up your job abroad. You can start to prepare for this by working on plans each time you come back for vacation.

One of the better ways to do this is to look into franchise businesses that fit your goal.  In some cases, Franchisors can provide active management of the business in the start-up year.  This way, you or his family member can be taught how to run the business on-the-job. There is no better way to prepare and train than going through this kind of hands-on training.

Typical Back-For-Good Situations

When you are finally home in the Philippines, you could be one of those who say they cannot adjust to the new life.  Most of the time, it is because you realize that what you have saved is not enough.  This is so because it usually is taking you longer to find a job or to think or put up a new business or maybe your lifestyle has just changed.  In this case, your only choice really, is to cut down on expenses drastically until you are able to settle down.

Those who have lived in the Philippines all their lives know that setting up businesses can lead to a lot of frustration especially since the choice of business should be dependent on the passion of the person, interest, size of market and sufficient funding.  To all the OFWs and those who want to be OFWs out there, always remember the saying that “The grass is always greener on the other side.”  Examine your options well whatever side you are in now before making important decisions to uproot yourselves and move overseas or to come back home.

Post Script

With today’s global financial crisis, the challenges are even more pronounced.  Economies of practically every country are melting down.  New investments are not happening and all are trying to conserve whatever cash and assets they have.  Worse, credit is very tight such that even ongoing good businesses are hard put to maintain, much less expand their operations. What is the bottom line of all this? Be practical. Hold on to your jobs for as long as possible.  Don’t rush into starting up new businesses.  The rule of the day is to conserve your assets and avoid risks.