IT HAS been my advocacy over the past five years to concentrate on teaching financial literacy to income-earning Filipinos. Fortunately or unfortunately, a great majority of Filipinos earning substantial regular income are the Overseas Filipino Workers or OFWs. I am quite blessed to be able to get to know them and their problems related to financial literacy up close. It gives me a real sense of accomplishment to be able to assist them in understanding the need to save and to grow their savings so that they may be financially independent when they come back for good in our country.

In the first place, the reasons why they go abroad is a combination of the following and not necessarily in order:

1) Lack of appropriate jobs for them locally. Sometimes, they have job opportunities in the Philippines but they know that they have technical capabilities that will give them better paying jobs abroad. The sense of accomplishment is also a very important part of life. When they lose that feeling, it can be very depressing and the nagging thought that they could have done better in life will haunt them till they grow old.

2) Want the experience and adventure abroad. There are some OFWs who are not really there for the sense of accomplishment but for the thrill of being alone abroad and living a different life. Granted that this might not be a great number of people but it is true especially for those who are young and single. Hopefully, they can combine their 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. Sometimes though, they need to carefully analyze their net pay. I know of some 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 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, led by a prominent College in Parañaque and one of the largest (if not the largest) Investment Bank, has put together a Capital Markets Institute of the Philippines (CMIP) to precisely educate teachers who teach finance and economics in investments and personal finance. CFE is fortunate to be actively involved with this group. 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 they even leave the country, first and foremost, they should have a personal financial goal. They should know exactly:

1) How much they are worth. They need to make their Personal Statement of Assets and Liabilities and Personal Income & Expense Statements.

2) They should agree with their family left behind what their budget should be and be ready to send only that and no more. Their 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, they should follow the formula INCOME-SAVINGS= EXPENSES. It is important that they not only keep some money for their personal expenses abroad but also the savings for themselves.

4) They should try their best to follow the 80-20 rule. They should save 20% of income for their future capital. If they can't save 20% they can start even with 1% but they have to get that winning experience.

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

The whole end goal of most OFWs is to come home “for good” with enough saved so that they can sustain a fairly comfortable financial life with their family.
These goals have to be quantified over specific time periods. They need to monitor their progress and thus should regularly update their personal financial plan.

Many times, OFWs become so homesick and start believing that they have enough saved and that they can easily find a job or business when they come home. They start believing that what they have saved will tide them over until they find the job or business. Unfortunately, many times this is not a realistic assumption.

If they still need a job, they should be relatively sure they have that job before coming home for good. For those who dream of getting into business, they should prepare for the business that they intend to get into. They should prepare themselves together with their family in identifying what business they 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 they give up their job abroad. They can start to prepare for this by working on their plans each time they come back for their vacation.

One of the better ways to do this is to look into franchise businesses that fit their goal. In some cases, Franchisors can provide active management of the business in the start-up year. This way, the OFW 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 they are finally home in the Philippines, some OFWs say they cannot adjust to the new life. Most of the time, it is because they realize that what they have saved is not enough. This is so because it usually is taking them longer to find a job or to think or put up a new business. In this case, their only choice really, is to cut down on their expenses drastically until they 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 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.

FRANCISCO J. COLAYCO is an entrepreneur, a venture developer and financial advisor. He has over 40 years of experience that covers service contracting in the Middle East, manufacturing, trading construction, shipbuilding, management consulting, banking and financial services. He is the Chairman of the Colayco Foundation for Education (CFE), a prime mover of the financial literacy movement. He joins our website blog to share with ordinary income earners, Overseas Filipino Workers (OFW) and students the simple principles to "Save what you earn and grow what you save." For questions, you may email Mr. Colayco at info@colaycofoundation.com or text +63917-8537333.

CFE is the publisher of Mr. Colayco's bestsellers: Wealth Within Your Reach (2004 National Book Award for Business and Economics), Making Your Money Work (Nominated in 2005, National Book Awards Business and Economics), Pera Palaguin Workbook and Money for Kids. The books are available at National Bookstore, Powerbooks, Fully Booked, Pandayan or directly from CFE. CFE is also the producer of the PISOBILITIES DVD series, available at all SM record bars, National Bookstore, Odyssey, Astrovision, Astroplus and other major audio-video stores nationwide. CFE also conducts personal finance management talks, seminars, and workshops. For more information on CFE programs, visit www.colaycofoundation.com or call (632) 637-3731 or 637-3741.