How OFWs can avoid the money trap


Posted at May 19 2012 10:48 PM | Updated as of May 21 2012 06:00 PM

This is the second of a two-part feature by Pru Life UK on the challenges overseas Filipino workers face when it comes to saving, and tips on how they can become more prudent with their finances. 

Part 1: Why OFWs have a hard time saving

MANILA, Philippines - It's not how much you earn, but how much you save. Pru Life UK Senior Vice President and Chief Marketing Officer Belle Tiongco recognizes the difficulties of saving.

"Saving is difficult for everyone except for those who are very disciplined.  There are people who have big incomes/salaries, and yet do not have substantial savings. It's not the size of the earnings, I think it's the extent of discipline that one has that determines his capacity to save," Tiongco said.

There is no universal mathematical formula to determine how much you can save, says Tiongco but there is an adage that OFWs can always rely on: needs vs. wants.

"For everything that costs money, you ask yourself: is this a need, or is it a want?  Needs have to be funded - food, clothing, and shelter, tuition, home rent, etc.  But vacations abroad, the upgrade on the iPhone, the new model of the laptop, the new camera, etc. - these are wants," she said.

"Everyone can study their cash flows and see where they can make changes so that they can ‘set aside’ something for savings."

Financial antidotes

So given the main reasons why OFWs have a hard time saving, what must they do in order to not fall in the money trap?

Control expenses back at home

Pru Life UK President and CEO Antonio de Rosas said family members of the OFW have a major role to play. “Family members must itemize expenses before the remits.  Just sending them an allowance will rarely work unless your spouse who is left at home has proven to have managed household expenses well.”

He stressed: “tell your family to delay gratification and just because you are abroad, it does not mean they can now afford things they want but which they don't need.”

Control expenses abroad

OFWs should spend way below their means while away from their families. This may be hard, but it has to be done.

De Rosas explained: “You are abroad for a short time to save. Most OFWs dream to build a home for their families and quite a few would purchase businesses but less would think of delaying gratification for both the OFW abroad and their family at home to prioritize savings.”

Government intervention

Manpower agencies should shoulder the placement fees of the workers they will be sending abroad. “The government should pass a law prohibiting OFW employees from paying placement fees. They are shelling out precious money for something they shouldn’t be paying for in the first place,” he said.

"Financial education should also be stepped up before OFWs are deployed which would teach them how to allocate their financial resources to savings and expenses while working abroad.  Basic financial products of financial institutions which would help them achieve their financial goals should also be introduced to them.”

Be conservative financially

At the end of the day, both Pru Life UK officials agree that being prudent in their financial decisions is what will spell the difference for the OFWs.

It is hard to live abroad, away from the people that you sacrifice and work for and it is also up to the OFW to make sure that all their hardships will be worth it.

“Save first before spending.  In the long run, your stint abroad might not have been worth it if you end up with nothing, or even worse, debt in the end," Tiongco said.

Tiongco also gives the OFW a perspective to which to look at their current financial standing. “I don't believe there is a 'time limit' or a prescribed number of years for OFWs to work abroad.  There are so many opportunities, so many types of work, so many dreams to fulfill, that it's difficult to say when one's ‘tour of duty’ is over.”

"But one thing I would prescribe is that if you're an OFW, you ask yourself whether your family is more secure today, than they were in the past.  If you can answer this confidently, and positively, then the sacrifice will all be worth it."


Pru Life UK is a subsidiary of Prudential plc, a United Kingdom-registered company. Pru Life UK and Prudential plc are not affiliated with Prudential Financial, Inc. (a US-registered company), Philippine Prudential Life Insurance Company, Prudentialife Plans, Inc. or Prudential Guarantee and Assurance, Inc. (all Philippine-registered companies). Pru Life UK is a life insurance company and is not engaged in the business of selling pre-need plans.