How to Avoid the Common Mistakes Overseas Filipino Workers (OFWs) Commit with Money

A Filipina factory worker in Singapore is facing money problems. Despite earning more than she has ever earned in the Philippines, her family is still struggling to keep their finances in order. She has sacrificed a lot to get a job in a foreign land so that she can earn enough for her family back home. But despite her growing salary, the financial burden she is under never seems to ease.

Unfortunately, her story is common to OFW’s who are suddenly faced with bigger income. There are several possible reasons why families of OFWs still suffer from financial difficulties. Top among them is financial mismanagement.

There are approximately 8.7 to 11 million Filipinos working overseas and at this time only 44 percent of OFW families set aside money for their savings. Sadly, a huge number of OFWs are still suffering from inadequate income. This happens even if they can now earn more than the amount they actually need.

Here are a few money related mistakes of OFWs that we can all learn to avoid.

Irresponsible Spending

When given a bigger budget, the normal reaction of most households is to spend more. People love to feel they can afford to buy stuff. Some want to show off to others that they now have money to spend. They buy gadgets, toys and other expensive items to prove their worth.

This is the primary reason why families of OFW’s who struggled with meager salary still struggle with higher income. They spend on things they totally do not need just because now they can. They have absolutely no regard as to what implications their actions may have on their financial standing. As long as there is money, they are there to spend it.

If we are to learn from this pitiable scenario, we ought to acknowledge that an increase in income should not mean a change in our lifestyle. Otherwise our expenses will catch up with our salary leaving us as poor as before.

No Long-Term Financial Plans

OFW households, who are not aware of the benefits of long-term planning, normally spend recklessly. They tend to give priority to buying things that are not actually necessary. It may be because they are not wired to think about their future. If they were any wiser, they would consider their own financial plan for the following:
  1. Debt payments to eliminate expenses due to interests
  2. Financial protection through life and health insurance policies
  3. Education fund for their children’s college education
  4. Retirement fund when it’s time to stop working
  5. Investments in business, stocks or mutual funds to attain financial freedom

Lack of Financial Skills of Family Members

OFWs have to endure the pain of not being able to see their families for a very long time. They miss being there for the kids. They probably wished they could watch their children grow up. It’s the price they pay just to provide for their loved-ones. It’s not only emotional torment. Some OFWs suffer from physical abuses which sometimes lead to death.

So it’s common practice for an OFW to send all the money back home. This is to make sure his or her family will feel better off. Live good prosperous lives. The family may buy everything they want to feel rich. But this results to the common problems we see when people don’t know how to handle money. It ultimately results to too much spending and less saving.

Ideally, an OFW should have someone he or she can trust at home to handle the finances. But if not, it’s wiser to withhold a significant portion of the money earned to start saving. It will also help to teach those at home not to be too dependent. Give them enough but not too much so that they will learn to stand on their own feet.

Failure to Invest Properly

According to the Consumer Expectations Survey for 2011, out of the 44 percent of OFW households who save, only 5.7 percent have investments. When you think about that number, it just says that most are holding their income through their savings account. That’s unfortunate because we know how little earnings a savings account generate through interests. On top of that, inflation is eating away at their money’s worth year after year.

Well, if you happen to be an OFW yourself you should know that there are investment instruments you can consider to preserve and grow your money. I write often about these investment options in this blog so don’t forget to sign up to receive our newsletter. Also, if you know OFWs whom you care about, you can let them know about this blog as well. Tell them to "Invest in Your Future".

Let’s share the knowledge. It’s precious but it’s free!

Photo Credit: kalleboo (Creative Commons)