Month: January 2018

Do you often find yourself left with almost nothing every end of the month? If yes, then you are in financial trouble. You might be stuck in the same situation prior to your work overseas, but the difference now is that you are earning in dollars. Still, it’s no excuse to use all of your salary and rely on what you’ll receive the following month.

You don’t have to live from paycheck-to-paycheck anymore. In fact, now is the perfect time to get out of this cycle since you are earning more than what you earn back in the Philippines.

What can you do? Here’s what:

Know your financial situation. 

We constantly stress the need to budget and there’s a reason for it. Still, if you follow budgeting properly and still end up almost empty by the 30th, perhaps it’s time to assess where you are financially situated.

How will you do that? Look into your and your family’s lifestyle closely. Are you constantly sending money and/or balikbayan boxes full of goodies to them? Do you often ride a cab instead of walking or riding more affordable public vehicles? Is shopping part of your budget?

These little things could eat up a lot, which also explains why you are living from paycheck-to-paycheck.

Tip: Make it a habit to list all of your spending. This way, you can check what areas you can cut back and make the necessary adjustments. 

Differentiate needs from wants. 

Needs are non-negotiable – food, electricity, water, shelter, and your kids’ tuition fee. On the other hand, wants are something you can live without – shopping, new phone, annual vacation, Netflix subscription, and the list goes on.

Why should you differentiate? It allows you to prioritize your spending, thereby maximizing your savings. When you differentiate needs from wants, you have a closer look at areas you can cut back and establish alternatives that is not too heavy on your budget. In the end, you will be able to save more, which you can allot for important things such as savings or Emergency Fund.

Practicality is key. 

Now that you established needs from wants, the next thing you need to do is to become more practical.

Practical is defined as “reasonable to do or use.” This means you get to differentiate what is good and affordable for you without spending too much. For instance, you saw the latest Nike basketball shoes retailing at $10, but there is somewhat similar style for half the price. Of course, you need to look into the quality as well since this will define whether it’s a practical purchase or not.

In other words, practicality is about cutting back on luxuries. Look for cheaper alternatives that are of good quality. Don’t settle.

Look for income-generating opportunities. 

It was said that to attain financial freedom, you need to have more than one income stream. That’s true. In fact, you can’t just rely on your existing job, especially if you want to get out of the paycheck cycle.

What should you do then? Don’t be afraid to look for other income opportunities. Take a second job, venture into online selling, rent extra space in your apartment, or do freelance worker. There are tons of opportunities you can try. It’s just a matter of finding something you can be committed to.

In case you need extra cash, Balikbayad is here to help. Send your loan application online for pre-approval and we will get back to you as soon as we can.

There are many reasons why you decided to work overseas – to send your kids to a good school, have a house you can call your own, sufficient savings that will last you for years, and a small business that will sustain your everyday needs among many others. Whatever you hope to achieve, it will fall under one big umbrella and that is financial freedom. 

Here’s the thing: the term “financial freedom” may be easy to spell, but it can be challenging to make it happen. Still, this doesn’t mean you cannot achieve it. It may not guarantee 100 percent success, but these six steps could help.

First, get out of debt. 

At one point in your life, you can’t help but borrow money from lenders. That’s okay, especially if you used the proceeds for important purchases. Nonetheless, if you really want to say that you achieved financial freedom, then you need to get out of debt so you could focus more on savings and investments.

To guide you better, check out this post to help you get out of debt.

Second, set aside a budget for your Emergency Fund. 

Emergency fund is important. You’ll never know what could happen, so it’s better to be prepared. This is essential because you can use the emergency fund in times of, well, emergency.

Ideally, the fund must help you sustain at least two to three months worth of your income. This is enough to help you get through in case of loss of job, sudden expense, and illness among others. Remember, the purpose of the fund is for emergency expenses only. Buying a new phone or tablet is not part of the emergency list.

Here are tips to help you set up your Emergency Fund.

Third, prioritize long-term savings. 

Don’t just settle with having an Emergency Fund. Another fund you need to have is long-term savings account.

It’s not the savings + remittance account you set up before you left for your work overseas. Long-term savings is a separate account that could serve as your Retirement Fund. You may opt for the typical savings account, but you might want to consider long-term time deposit for higher interest rate. You can deposit anytime plus the interest earned is cumulative, thereby allowing you to earn more.

Tip: In case you prefer the typical savings, make sure that this long-term savings account should be in passbook only. Having an ATM can be tempting and makes it easier for you or your family to withdraw, thereby defeating the purpose.

Fourth, make long-term investments. 

They say that to be able to achieve financial freedom, you need to have more than one source of income. That’s true. Opening your own business, no matter how small it is, might be your go-to option, but keep in mind that this could be risky. You are your own boss and managing a business is not as easy as it sounds.

To minimize risk, you might want to look into investments. There are many options – mutual fund, UITF, stocks, and bonds. Each of them comes with its own risk and benefits, so it is best to explore your options and understand them before putting your money into it.

Fifth, it’s time to make those large purchases. 

Ideally, you should be doing the first four steps before you even think about buying your own home or car. This is because the first four steps give you enough time and leverage to invest into something bigger while reducing the risk of losing everything you worked hard for.

Once you achieved the first four steps, go ahead and make that large purchase. Still, take it one purchase at a time. Give yourself a few more years to save up before buying again.

You can do it!

Being an OFW means you are the breadwinner. This also means you are in charge of almost all, if not all the expenses, back in the Philippines. While some expenses can be eliminated (read: fastfood or trip to Starbucks), there are non-negotiable expenses you have to deal with every month. This includes electricity bill back home and even in your place overseas.

Obviously, you need electricity, so you cannot eliminate it completely. The good news is you and your family back home can do something to at least decrease your electric bill and save money in the process.

Here’s what you can do:

1. Make it a habit to check the energy rating of appliances before buying. Go for appliances that are more energy-efficient. The higher the energy efficiency ratio (EER), the better the energy saving performance feature for the appliance. It could be more expensive than appliances that are less energy-efficient, but you can save more in the long run because your family is able to reduce electric consumption.

2. Iron clothes in bulk by scheduling a specific day every week. Consequently, iron clothes that require low temperature then move from there. Keep in mind that iron takes more electricity when you just opened it. You or your spouse can also use fabric conditioners to reduce the number of clothes to be ironed.

3. Put on the timer if you plan to use the air-conditioning unit at night. This will automatically turn off the unit that could translate to additional savings,

4. Go for LED lights instead of incandescent lights. LED lights last longer and are more energy-efficient compared to its counterparts.

5. Use thick and dark colored curtains on your window to stop the heat from going in and penetrating the room. This is a better option that putting dark tint on your windows since you can simply open the curtain in case you need additional lighting inside the room.

6. Switch to induction cooker since majority of the heat is transferred to the cooking vessel instead of putting it into waste. You get to save extra cash as well since you don’t have to buy gas. Also, use flat-bottomed pots and pans since they are easier and faster to heat.

7. Charge gadgets wisely and efficiently, preferably when the battery is critically low. At the same time, avoid leaving gadgets plugged overnight.

8. Always unplug when the appliance or charger is not in use. Even if an appliance is turned off, it still consumes electricity, which leads to higher electricity bill. Unplug.

9. Regularly maintain home appliances by getting it checked to ensure efficiency. Appliance companies have dedicated maintenance team, so make that call and schedule maintenance.

10. Get rid of appliances that are less energy-efficient. The 90’s refrigerator may be working fine. but it is consuming more electricity, which could contribute to higher electric bill. The same goes with air conditioning units.

11. Do not place heat-generating appliances like television or lamps near the air conditioning unit. The heat coming from these types of appliances will be picked up by the unit’s thermostat, thereby increasing its energy consumption.

12. Choose appliances in your home wisely. Manufacturers these days are becoming more conscious in designing and making their product. Most incorporate energy-saving features, so in case you need to shop for an appliance, don’t just stop with the energy efficient ratio but also ask for its features that could help lower your electric bill.

Keep in mind that your bill won’t magically decrease over night. These saving techniques take time before they are converted into habits. Practice discipline and everyone in the family should be committed to it.

OFW life is not easy. Yes, you are earning in dollars and more than what you can earn in the Philippines, but with bigger earnings come bigger responsibilities. You need to make sure that your family is financially secure and at the same time, will have food on the table. You take the burden of paying everything – from bills to tuition fee and even medical expenses of your relatives.

Apparently, it doesn’t end there. There will always be a sense of longing and guilt feeling, which you compensate by sending a balikbayan box with love. Surely you mean well, but one of the reasons why many OFWs don’t have enough savings is because they spend up to the last centavo buying something for the family. Worse, this “something” might not even last for at least a year.

You can change that without compromising the “need” to send balikbayan box back home. Here are questions you need to ask yourself first before shopping for the box’s contents:

Do they need this? 

Everybody needs clothes and shoes, but do you really have to buy these items frequently? The shoes you bought for your son six months ago still fits so there’s no need to buy one. Plus, you spouse doesn’t need bottles of perfume good for the next three years.

Unless you plan to turn this into a buy-and-sell business, evaluate the need for such item first before buying. Otherwise, you could be wasting your hard-earned money for something your family won’t use anyway. Quality over quantity.

Is it part of the budget? 

There is a reason why budgeting it important. It allows you to allocate your money to make sure you will last and at the same time, make you conscious of your spending habits because you can easily see which areas you can cut down.

Before shopping, look into your budget first to see if it can accommodate another expense. If not, don’t purchase an item – yet – even if it’s on sale.

Can I afford this item? 

Do you know why many Filipinos are living in debt? There are many reasons, but one of them is relying heavily on credit such as credit card or loan. There is nothing wrong with applying for a loan if you use it properly and for the right reasons like putting up your own small business. But if you apply for the purpose of buying a new phone or laptop for your kids, then you need to re-think your priorities and avoid buying items you can’t afford to pay in cash.

The best thing you can do is to walk away. That’s fine. It only means your money deserve something better and more worthwhile. Better yet, save up for it.

Is this the best deal? 

There are stores that carry the same item but for a different price. Before you buy anything that is really necessary, make sure to shop around and compare prices per store. Some stores charge higher and the goal is the get the best deal (or cheapest price) for bigger savings. There are stores that offer free add-ons or discounts, which you should take advantage of as well.

It doesn’t matter if one store is more expensive by $2. That’s still $2-worth of savings and you shouldn’t say no to that.

How is the quality of the item?

The biggest department store in your place is on sale, so you decided to check it out. Sure, you get clothes and shoes for half the price, but how is the quality? Are you willing to pay for rubber shoes with 80 percent price tag but the soles look like rats chewed on them?

There’s nothing wrong with buying on discounts, but make sure to check the quality of the items first. You want to save, but if saving involves compromised items, then it’s best to leave them on the rack and wait for better opportunities.

At the end of the day, don’t feel pressured to shop for your family as often as you can, especially if it means compromising your savings. More than the material things, what your family wants is your safety and good health, so focus on that.

Investment is not as easy as it sounds. Yes, it helps increase your earnings (even doubles or triples your money), but it will always require knowledge, time. commitment, and more importantly, patience.

That’s not all. You’re always bound to make mistakes, which could affect your financial strategies. If you’re not too careful and vigilant, you might even lose the money you worked hard for.

Don’t worry. The market may be difficult to predict but there are some things you can control, such as avoiding these investment mistakes:

Mistake No. 1: Not educating itself about what investment is.

Don’t take investment for granted. Its purpose is to grow your money, but it needs time, discipline, knowledge, and a lot of patience to make it work to your advantage. If you really want to make it work, then it is imperative that you know what investment is.

One mistake people make (not just OFWs) is that they don’t understand what investment truly means, including the variety of ways on how you can earn. You can change that by keeping yourself informed. Maximize Internet and find out everything you need to know about investing you money. The more informed you are, the better the chances of making your investment work for you.

Just in case you can’t understand certain terms or how a particular investment option works, don’t be afraid to ask. Clarify your concerns instead of saying yes on something you don’t understand. Otherwise, there is a bigger possibility of losing the money intended for important expenses, say your Retirement Fund or kids’ educational plan.

Mistake No. 2: Putting all eggs in one basket. 

Here’s something you should know about investment: there is always a risk involved. It will only differ on the type of investment you chose, but risks will always be a part of it.

Therefore, diversify your investments by putting your money in different assets such as bonds or stocks. This way, you don’t lose your money “one time, bigtime,” so make sure you spread it out evenly.

“But I just want to invest my money in stocks or UITF,” you might say. That’s fine. If you plan to get UITF, make sure you go for Peso Balanced Fund (learn more about it here.) or invest in various companies to keep your portfolio diversified.

Mistake No. 3: Undefined financial goals. 

It’s easy to say, “I want to invest” or “I want to grow my money,” but for how long and for what purpose?

This is another common investment mistake committed by many. Consequently, not many people realize the importance of defining financial goals according to term.

The next time you say you want to grow your money, ask yourself first about what you plan to do with it and how soon (in months or years) do you want to achieve it. Consequently, define and characterize your goals into short, medium, and long term. This will serve as your reminder on when to stop and when to keep waiting in order to make those financial goals happen.

Mistake No. 4: Investing without any emergency fund. 

There’s nothing wrong with investing. What makes it wrong is that you invest without preparing for what might happen in case you lost your money.

Keep in mind that the market can be volatile. One day you are earning and the next day, you are losing your money. Without any emergency fund, you might end up losing a big chunk from your account and it will take time before you get it back.

Therefore, establish not just an Investment Fund but also an Emergency Fund. The Emergency Fund will keep you covered in case something happens to your investment.

READ: How to Establish your Emergency Fund

Mistake No. 5: Not knowing how to manage or assess risks. 

Investment always comes with risks. In fact, that’s what makes it exciting. The problem lies on how you handle those risks.

One of the common investment mistakes made by OFWs is not understanding the risks associated with investing according to level of tolerance (conservative, aggressive, or balanced). Identify the risk you are willing to take and then work from there. There are many investment choices you can choose from according to your risk level, so choose based on where you are most comfortable.

The world of investing can be overwhelming in the beginning. You’re going to be fine. Just read up, keep yourself informed, and start small – for now. You’ll learn more about it as you go along this journey. Good luck!