Thousands of Filipinos live and work abroad so they can better provide for the needs of their loved ones, securing a future for them that is otherwise not possible if they will stay and work here in the Philippines. Indeed, knowing us Filipinos, the OFWs were able to provide the life that we always dreamed of for our families. The OFWs send a huge chunk – up to 90% – of their earnings back home, and more often than not, they are left with a meager amount just enough to sustain them before the next paycheck arrives.
This has always been the case. And when the OFW come home after decades of working abroad, he or she was basically near-broke. Such a sad OFW reality.
We are not saying that sending money back home is completely wrong, but what we are trying to say is that the OFWs should pay themselves first through savings. The OFWs should learn how to manage their money properly. The OFWs should learn how to invest and build their wealth. The OFWs should think about their retirement, too.
Thus, the question – what can be done to combat this spend-all lifestyle? Now here’s the simple solution to this dilemma.
The 70-20-10 strategy
Such a strategy is specifically designed for the OFWs. By virtue of this savings strategy, 70% of the earnings must be devoted to remittances and own expenses, 20% to investments and 10% to savings. It is up to you to split the 70% between how much you are spending and how much to send to your families. The basic premise is you must be aware of at least an estimate of the total amount you are spending on a bi-weekly or monthly basis.
When it comes to your investments, opportunities abound from time deposits to stocks to mutual funds. Did you know that an OFW can invest while he or she is still abroad? The Philippine Stock Exchange allows individuals to buy and sell shares and monitor trading online. You just have to open an account with an online brokerage company.
For savings, government offices such as the Social Security System launch a provident fund program known as PESO (Personal Equity and Savings Option). The goal of PESO is to grow an OFW’s fund for his or her retirement. You can start with Php1,000 with which the SSS will invest in relatively safe financial instruments like government securities. Thus, capital gains are guaranteed.
Check here on how an overseas Filipino can be a member of SSS.
Towards succeeding at the strategy
Fundamentally, there are positive consequences of implementing the 70-20-10 strategy. First, inculcate money discipline. Living a lavish lifestyle while abroad is unnecessary. Live a simpler life especially since there are currency differences. Mind your own expenses. Before you spend on something, ask yourself – Do I really need this? What value can I get from this? Second, make wise money decisions. Study any investment that you wish to make to build your wealth. Know your options. Likewise, get yourself out of debt and work on saving some money for your own retirement.
Through all these, when you decide to go back home to your family, there will be no financial constraints whatsoever that will stop you from doing so. After all, no OFW wants to go home with nothing in their pockets after years and years of spending their life abroad.
Bryan is a Filipino freelance writer and a business enthusiast. Currently blogs and contributes to balinkbayan.gov.ph. Some of his hobbies are playing guitar, reading books, playing basketball and hanging out with friends. 🙂
Related Articles:
Bryan Bal
Latest posts by Bryan Bal (see all)
- Money Lessons Every OFW Must Know - 4 February, 2016
