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3 Reasons Why Many OFWs Don’t Have Savings and What to Do about It

Do you have a savings account? If yes, do you regularly (which means every month) deposit a fixed amount in it? If yes again, then congratulations. You are in the right track toward achieving financial freedom.

If not, then what went wrong? What’s stopping you from having a savings account or at least regularly depositing from that account?

Perhaps, below are the reasons:

Procrastination

Dictionary defines “procrastination” as the “act of delaying or postponing something.” 

In other words, you promised to save or open a savings account but constantly delays it and find tons of excuses not to do so (like a sale of your kids’ favorite shoe brand, so you promise to start saving next month and forget about it for the nth time).

What can you do? It’s about having the right and committed mindset. You will never run out of excuses just to delay saving, but if you start teaching your mind that you really need to do it NOW, then you could have a shot of at least depositing something on that particular month until it becomes a habit. The more committed and disciplined you are, the higher the chance of making saving happen.

Lack of Self Control 

You promised to save 10 percent of your monthly earnings and put it in a fund. Unfortunately, you passed by a department store on your way home and saw that big “Sale” sign on the front door. Instead of walking away, you decided to go inside and that “10 percent per month for savings” is gone for good.

What can you do? It’s hard to deny that spending feels better than saving – for now. Consequently, you also feel discouraged every time you see a not-so-big amount reflecting on your bank account. It may be cliche, but all good things come to those who wait.

Keep in mind that achieving financial freedom doesn’t happen overnight. At the same time, it is a combination of commitment, discipline, and (a lot of) self-control to keep you focused on your financial priorities. It’s hard at first, but resisting the habit of spending will help you achieve your financial goals.

Twisted View on Saving 

Have you heard of the term “loss aversion?” This means you prefer to avoid losses to acquire equivalent gains. For instance, you prefer holding on to your P1,000 instead of saving or investing it in order to grow the said amount.

This is where the twisted view on saving comes in. There are people who will hold on to that getting a portion in their monthly salary is equivalent to loss because something is being taken away. If you look at saving as a form of loss, then saving is and will have a hard time being part of your system.

What can you do? Start thinking of saving (or even investing) as a form of gain. Look at saving as a value and understand its value. Once you start recognizing the value of setting aside money, then it will come to you naturally.

The truth is you’re not alone in the No Savings Department. There are thousands of OFWs who are struggling when it comes to saving, thereby causing them financial distress in the long run. The good news is it’s not too late to start saving for your and your family’s future. Start now and don’t wait for that “emergency” to happen. You can do it.

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4 Tips on How OFWs Can Protect Themselves against Investment Scam

There are many ways on how you can grow your money. Having a savings account is safe and won’t let you down, although this will yield lower return. If you are willing to experiment, getting a time deposit could be another option. Apparently, savings and time deposit are not the only investment options you can avail of. You can turn to bonds, mutual funds, or even stocks to make your money grow double (or triple).

“Hindi ko naman naiintindihan yan,” you might say.

Sadly, many people are taking advantage of OFW’s lack of understanding when it comes to various investment options. These people will lure you to get this and that and promise higher return of investment – only to realize in the end that it is a scam and your hard-earned money is gone.

The good news is you can do something about it to avoid falling into the trap. Here’s what you can do:

Learn everything there is to learn about investment options. 

It’s not enough that you want to grow your money to live comfortably eventually. Before you invest your hard-earned money, you need to educate yourself first about the investment options out there.

In other words, read up. Use the Internet to learn more about UITF, mutual fund, bonds, and stocks among others. If time (and budget) permits, attend seminars. Read financial blogs because you will find tons of information there. Join Facebook groups that are specifically for financial purposes and don’t be shy to ask questions. The more informed you are, the lesser the chances of becoming an investment scam victim because you know what you’re getting into.

Choose a company with good reputation and proven track record. 

It’s not enough that you know what you want. You need to find the right partner to make sure that they will help you in making those financial goals happen.

Therefore, choose an investment company with proven track record. The company must not be involved in unethical and illegal practices and at the same time, its leaders must be of people with integrity. Learn more about your chosen company by reading news and reviews about them before giving them your money.

Aside from the company reputation, your preferred investment partner must also be accredited by the Securities and Exchange Commission (SEC) and/or Bangko Sentral ng Pilipinas (BSP). This way, you are sure that the company is regulated and recognized by appropriate government entities. Consequently, it gives you a form of guarantee since you know that you – and your money – is protected.

There is no such thing as high return in short period of time. 

“Double your money in 10 days” or “Get your first million in a month.”

Sounds tempting, don’t you think? Since you are serious about growing your money, you decided to give in. Unfortunately, this is a perfect example of scam – and there is a chance you might not get your money back.

Keep in mind that earning from your investment won’t happen in days. It takes time for money to grow and even years to make sure that you meet your target amount. If the offer sounds too good to be true, then think twice before investing. All good things need time to grow.

Everything will be overwhelming at first, but don’t let it stop you from learning and eventually investing. Think about your goals and plans for the family to keep you going.

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Should you get an Educational Plan for your kids to fund college education?

Securing your family’s future is one of the primordial concerns of not just OFWs but every parent in general. By future, this includes your child’s college education.

Let’s face it. Sending a child to college is not easy – and cheap. Tuition fee must be paid twice every year, with the rate depending on the school. Then there’s the weekly allowance, commute or gas expense, miscellaneous fees to be paid on top of the tuition fee.

In other words, you need at least a million (or even higher if you’re aiming for Ateneo or La Salle) every year for four years to be able to send your child to a good school. With the expenses you need to pay, your monthly income and side earnings may not be enough to pay for your child’s college education.

This is why you resort to educational plan to help fund your college dreams for your child. Apparently, there were several pre-plan fiascos (CAP, anyone?) that makes you doubt whether to get an educational plan or not.

The next question is this: is getting an educational plan worth it? 

Benefits of Educational Plan 

  • It guarantees your child’s education, especially when your child dreams of going to a particular school.
  • An educational plan makes studying more affordable by supporting your child’s school fees.
  • The maturity benefit meets your child’s college expenses, especially when you start early.
  • There is an option to choose riders such as personal accident insurance. This means even if you are gone, your child will still be covered and go to college. Ask your agent about riders (although this means you have to pay for additional premium).

Downside of Educational Plan 

  • It takes away a big chunk in your monthly budget. Insurance plans don’t come free and if you plan to put add-ons in your child’s educational plan, this means higher premium as well. Check your budget first and see if you can accommodate additional expense.
  • The educational plan doesn’t cover the entire school fees. You still have to pay for certain expenses like allowance or miscellaneous fees, which you need to save up for.
  • The return on educational insurance plans is lower compared to the inflation of tuition fees.
  • The risk is still there. This is why it is important to invest in legitimate and reputable insurance companies.

Tips in Getting the Best Educational Plan for Your Child

  • Plan ahead. There is no better way of starting than doing it now.
  • Choose your insurance provider wisely. The insurance company must not only be known in the industry but is also legitimate, reliable, and capable of meeting your demands.
  • The benefits of an educational plan must be aligned according to your needs. Aside from the college plan, ask for additional features like life insurance to make sure that your child can still continue its college education in case something happens to you.
  • Consider your budget. Add-ons can be helpful, but if it will burden the entire family because of the premiums you have to pay, then stick to the basics.
  • Educate yourself about educational plans first before getting one. Learn about concepts, terminologies, and the basics of insurance so you will know what the agent is talking about.

More than educational plans, it is best to start saving for your child’s college education as early as now. Get a sidejob if possible to help you save more. Then, set aside a specific fund for this and make sure not to get a single centavo from it. This will give you enough leverage by the time your child enters college (and preferably in his or her preferred university).

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6 OFW Money Habits You Need to Break this 2018 – and Beyond

It’s the start of a new year. This means clean slate, new beginning, and a fresh page on your 365-day calendar. While the long-term goal remains the same, that is to provide a better and secure life for your family, you still list resolutions and plans for the year with the ultimate goal of achieving it by December 31.

Since you are listing your yearly goals, you might consider writing down your financial plans and at the same time, getting rid of these bad money habits for a more financially-secure future:

The “mamaya na” habit

Admit it. Your first month salary overseas was sent back home since your family needs it more than you do. Then, you promised yourself that you will dedicate a portion of your earnings for savings starting next month, to which you failed to do – again. You may not notice it but you put off savings or setting an Emergency Fund and only promise to do so when there’s extra income. The next thing you know, you are back in Philippine soil with little savings.

Get rid of the habit by imposing discipline on yourself when it comes to saving, Do what you can now and don’t wait for rainy days to come before you start taking savings seriously.

The “pakisama-slash-manlilibre” habit

You got a two-week vacation so you decided to go home and spend time with your family. Everyone in your barangay knows that you’re coming home, so they expect “libre.” To save face, you decided to give in since you’ll earn that money spent anyway. Then there are relatives and friends who constantly ask you out for a drink, so you have no choice but to pay for everything – even if it means using the little savings you have,

It’s okay to treat once in a while, but you should know when to say no and learn how to put some boundaries, especially when money is involved. You don’t have to be friends with everyone, especially those who are taking advantage of your position. Say no when necessary.

The “bahala na sa bayaran” habit

One good thing about being overseas: some items are cheaper compared to buying them in the Philippines. You want to take advantage of that so on your next paycheck, you decided to splurge and buy a lot of goods for the family back home. It doesn’t matter if you used up your entire one month salary. You’ll earn them anyway next month.

What if someone in the family got sick even before you get your salary – what will you do? You might say “bahala na” but don’t you think it’s much better if you are prepared for situations like this?

The “para sa pamilya naman” habit

You send most, if not all, of your earnings to your family back home. You even take side jobs for additional income. While there’s nothing wrong with this mentality, you are slowly starting to take away one important factor in the equation: you. 

Don’t send everything back home. Have your own savings. Set up an emergency fund (and don’t inform your family about it – yet). Prioritize your expenses. Have a break and treat yourself because you deserve it.

The “pasikat” habit

Your co-worker has a new phone. Your daughter called and asked for a tablet because her classmates have one. You bought new pair of shoes even if you just bought a par weeks ago. In other words, you give in to buying material things to make yourself and your family look “better off.”

This is okay if you have sufficient funds to sustain you for many years. If you rely on your monthly income with the danger of being out of job after your contract, then you need to re-think your priorities and stop buying things that won’t last forever.

The “hindi ko alam yan” attitude. 

At one point, someone talked to you about insurance, stock market, and other forms of investment. You brushed off the idea, saying that you don’t understand it anyway. As a result, you settle for the safe and low risk without even giving investment options a chance.

Here’s the thing: it won’t make you less of a person if you ask someone who is knowledgeable about something. Take your time off to educate yourself about stocks, UITFs, mutual funds, and bonds among many others. Eventually, start small and try what the market has to offer.

This post can also help you start your investment journey even with little capital.

Are you ready to break these bad money habits?