This is the first 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.
MANILA, Philippines - The overseas Filipinos worker (OFW) has long been heralded as the country’s new breed of heroes, and with good reason to do so. It takes strength, determination and a drive to have a better life for your families in order to survive working long hours in a foreign land – away from your family, friends and basically everything that you work for.
OFWs have also been cited as being major contributors to the Philippine economy for 2012. According to the Bangko Sentral ng Pilipinas (BSP), remittances from OFWs will grow further this year, and the government does not expect a drop in the demand for workers abroad real soon. For 2011, the Philippines was the fourth-largest remittance receiving country, with only India, China and Mexico topping the country in that category.
But on a more personal level, what should be ensured is that the sacrifices of these OFWs do not go to waste? Ideally, these overseas workers are working in order to give their families better lives – that implies having enough money to send their children to school, pay for their household expenses back at home while also having enough in their pockets to sustain their daily living in the foreign land they are in.
In the end, OFWs should have enough savings to invest and start a new life with when they go home.
"OFWs leave the country for the promise of financial stability in the short and long term. The financial goal should be that: stability for the future," said Pru Life UK Senior Vice President and Chief Marketing Officer Belle Tiongco.
"Stability is possible if you have enough funds for both aspirations (education, your own house or business) and unknowns (illnesses, accidents and other catastrophic events)."
The challenge of saving
The Philippines is not a savings-oriented country, according to Pru Life UK President and CEO Antonio de Rosas, and this financial behavior is something that most OFWs will have to combat.
"Our country's savings rate is one of the lowest in Asian region, and this is mostly due to a lack of financial literacy," he said.
There are three main reasons why OFWs have a hard time saving:
A big number of the OFWs are already in debt even before they leave the country. Most manpower agencies would require the OFW to pay for their placement fees which will usually take them about two years to settle.
Since they live away from their families, OFWs tend to compensate for lost time by buying things for their family they don’t really need. De Rosas said: "since the breadwinner is not at home to manage the expenses, their families tend to just spend the allowance being given to them on a monthly basis without proper budgeting."
Cost of living abroad
What the OFW needs on a daily basis in the country where he or she is domiciled may cost more. This could also be a big hindrance to what they can save if they are not careful.
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.