Top Money Mistakes That OFWs Make
Being an OFW has its pros and cons. You get to travel abroad and experience what it’s like to live outside the Philippines and work with people of different races and different cultures. Being an OFW also provides you with a unique understanding of the professional workplace in a global perspective, while earning the prestige and salary, as well as the recognition of achieving success in a foreign land.
However, you also have to deal with the consequences of being far away from home, separated from your loved ones. It can be a very depressing situation and can take an emotional toll on you as years go by. It’s a huge sacrifice that can impact your personal relationships and your financial standing, both in a positive and negative way. As it turns out, not all OFWs are aware of the consequences of their bad financial decisions.
You are only an OFW for as long as you have an employer willing to hire you and let you work for their company and in their country. Which means that anytime there is a problem with your employer or your employment status, you can lose your job in just a snap of a finger. Being an OFW is still considered temporary employment. Your contract can be cut short without warning. If you don’t plan for such eventualities, you can find yourself in an even worse situation than before you left the country.
If you’re an OFW who’s single and not encumbered with financial responsibilities back home, earning that significant amount of money gives you spending power. It can put you in a situation where you think you can pay off all those credit card debts and personal loans with no problem, because payday is just around the corner.
But remember that there’s such a thing as good debts and bad debts. Bad debts, like credit card bills and personal loans, don’t yield financial returns for you in the future. Good debts, like paying off real estate investments, increase in value over time and give you something in return for all of your hard work. Make sure you know which is which.
Many Filipinos remit money to their families living in the Philippines. However, as long as you send money back home, this also means that there will be too little left for you that will allow you to plan for your own financial future. A huge chunk of your income instantly goes to bills and other payables back home. It’s not totally inconceivable that even if you’ve been an OFW for twenty or thirty years, you remain broke and with little savings in the bank.
The huge difference in salary can overwhelm some OFWs, driving them to spend like there’s no tomorrow. It’s good to enjoy the fruits of your labor once in a while, but splurging on things you like but don’t need is not the way you can build a financially secure future. A growth in income gives you a sense of empowerment, and you feel the need to shower yourself and your loved ones with material things and leisure activities. That’s perfectly normal! But you have to learn how to manage your finances while you are still earning well. Keep your spending under control.
It’s very easy for OFWs to fall into the trap of working the same job for the next five or ten years if it puts food on the table, sends the kids to school, and pays for everything else. But do you really want to be an OFW forever? Do you want to be someone else’s assistant until you retire, when you can start your own business and be your own boss?
Everybody should have a goal, whether short-term or long-term. Envision the next five years and see what other pursuits you want to take on. Think about what you want to do once the house is fully paid and the kids have all graduated from college.
It’s hard to save money when most of it goes to remittance. And then whatever amount is left goes to your own utility bills, food, rent, and transportation. Most OFWs forego having a savings plan and just rely on salary loan application to get by. But if you just take out a loan for every financial emergency, you will be deep in debt before you even realize it.
Most families of OFWs also depend on them financially for basically everything. As a result, they become unwilling to find other sources of income, making it even harder for you to save money for yourself. Try to strike a balance between being a good provider and investing in your future. Instead of spending first and then saving what’s left, why not save first and spend the remainder? If you cultivate this good financial habit, you will have enough money for the rainy days, and then some.
Unfortunately, this is very common for Filipinos. No wonder your friends and relatives think you’re loaded and living the high life. Every time you go home for a vacation, it’s a grand homecoming. Whenever you go out to eat, you foot the bill. Because you know that a full meal here for a family of five only costs the price of a solo meal over there. It’s perfectly alright to treat your loved ones and have a good time. But if you’re spending money you don’t have and living the lifestyle you can’t afford, you’re in big trouble.
Real estate is a sound investment, but it’s not the only good investment around. You can invest in mutual funds or UITFs. You can learn the stock market and invest in stocks. You can be a business franchise owner and create more streams of income for you and your family. You can buy a life insurance policy, or even a retirement plan. There are many ways you can invest and grow your money. The sooner you do this, the sooner you can go back home to your family and achieve the financial freedom that you are working so hard for.