OFWs not spending wisely – Philam Life

MANILA, Philippines - Filipinos working overseas are the major contributor to the country’s rapid growth, but studies have shown that they are not spending their earnings wisely.

There are between 10- to 11 million Filipinos working abroad, sending remittances worth a whopping $23 billion in 2012 alone.

But studies conducted by the overseas Filipino workers (OFW) market segment of the Philippine American Life and General Insurance Co. (Philam Life) indicate that OFWs and their families have developed troubling habits which keep them from getting ahead in life and being successful in the long term.

One of these is that they have no financial goals. Goals are important and the OFW shouldn’t be the only one working toward meeting that goal; the family must do their part too.

Philam Life vice president for OFW market Cary Casipit noted that the second common mistake made is reckless spending, which both parties are guilty of.

“With a job that pays well, some overseas Filipinos see the excess money and think, ‘This is extra money I can spend,’ not ‘This is extra money I can save for the future,’” said Casipit.

In addition, both parties can also incur debts, thinking that the salary is enough to pay for it. But this way, they are moving backward, not forward.

Third, is the malas-swerte mindset. Most Filipinos consign their fate to luck.

“You’ll really get bad luck if you don’t plan. And you’ll never get good luck if you allow your money to sleep when you can grow it using a better-yielding financial tool,” Casipit said.

Fourth, the study noticed that most parents don’t teach family members about financial management. In the past, financial matters are relegated to the adults with the ‘you’re too young’ mindset. However, the child grows up without realizing the value of saving, budgeting, investing and financial planning.

“Parents should explain to their kids that although money can be earned, it can also be easily lost in a short time, making goal-setting crucial,” he said.

Fifth, most overseas Filipinos don’t plan for post-abroad life. They have to realize that it is a temporary – a limited – engagement. With this mindset, they have to consider preparing for their retirement, health and possible job loss.

Sixth, they tend to accumulate unproductive assets.

Casipit noted that Filipinos are eager entrepreneurs. But sometimes, they don’t plan things well. So they buy a piece of land or put up a business without thinking how they can make this profitable. “For something to be considered as investment, it should provide additional income,” Casipit said.

Finally, Filipinos are doped on the “get rich quick” investment schemes.

“If the return on an investment appears too good to be true, it usually is,” the Philam Life study advised. “It’s important to know how to grow your money using financially-sound instruments and to consult experts such as registered financial planners to give you the right advise and the right plan.”

Philam Life has a nationwide program called BalikBayani Program, a series of forums that teach OFWs and their families the basics of financial planning and investing.

“Working overseas grants you an amazing opportunity to meet your goals and realize the dreams that you have for your family. While it’s good to have excess money available, don’t fall into the trap of false security. Nothing is permanent that’s why you have to plan for the future,” Casipit said.  

Philam Life is one of the country’s life insurance companies It offers an extensive line of products in the industry that provides solutions to various financial needs including life protection, health insurance, savings, education, retirement, investment, group and credit life insurance. 

It is a member of AIA Group Ltd., the largest independent publicly listed pan-Asian life insurance group.