Even little savings can mean a lot

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One of the things we keep telling workers, especially overseas Filipino workers (OFWs), during counseling sessions at the Trade Union Congress of the Philippines is that we need to replace that habit of spending with the habit of saving. The savings rate of OFWs is way below their counterparts in China and Indonesia, for instance.

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Indeed, according to recent data from the Philippine Statistics Authority (PSA), despite sending remittances of billions to their families in the country, only two in every five OFWs are able to save from their cash remittances.

Data showed that around 1.9 million OFWs sent remittances in 2013 and only 40.7 percent of them were able to set aside savings from their cash remittances.

This was lower than the 42.2 percent of OFWs who had remitted cash to their families and were able to save from their cash remittances in 2012.

OFWs love to splurge, especially when they come home for the holidays. There is that thinking, “It’s my money, I’ve worked hard for it, and I’ve earned the right to spend it.”

They also like to make up for their absence by buying their loved ones whatever they like.

Although, it’s good for the economy, in the end OFW families would benefit more if they save even a little part of their income.

“Regardless of the amount of the cash remittances sent, for every 10 OFWs, six [61.7 percent] were able to save less than 25 percent of the total amount received, two [21.6 percent] were able to save from 25 percent to 49 percent of it, and about two [16.7 percent] saved 50 percent or more,” PSA said.

A good part of OFW earnings is spent on food and household needs and their children’s education. Then there are medical and emergency expenses and debt payments.

A lot of OFWs work years and years and have nothing to show for it. Sure they were able to send their kids to school but they have no investments and no savings, no financial security to fall back on when they go home.

A study of the Episcopal Commission for the Pastoral Care of Migrants and Itinerant People showed that despite the steadily rising remittance levels of Filipino migrant workers, at least 60% of their families remain poor.

Most OFWs come from poor families and only some of them are able to invest their money wisely to secure a comfortable future when they return. They are usually the skilled workers we send abroad, including our world-class seafarers, nurses and IT workers.

Most workers who go abroad though are classified as unskilled or semiskilled, such as those in household work. They also are the ones most susceptible to employer abuses.

We in the TUCP want more OFWs to save, to allocate portions of their remittances to savings and investments, not just in banks but other financial instruments.

Most Filipino workers who have a little extra money to invest would rather put it in banks, into low-yielding but more secure investments like time deposits, which is also why the Philippine financial system is still dominated by banks.

But money doesn’t grow in banks. If we leave our cash sitting in a bank account, the interests or returns of our deposit—as little as 1 percent per annum—is easily wiped out by inflation and taxes.

OFWs are better of investing the money elsewhere if they want a future nest egg when they finally come home.

They can invest in small franchises and other small businesses, or even the stock market, which has been doing quite well.

The Philippine Stock Exchange (PSE) has been broadening public participation in the stock exchange. It has expanded its trading hours and now offers an Internet-based trading platform to draw more retail investors and boost volume trading. It has also been coming out with more investment vehicles and products.

For the past few years, the PSE has been conducting seminars and workshops for ordinary investors, for people with some money to invest but who know little or nothing about the stock exchange. It has been targeting OFWs and their families in its marketing education efforts. Recently, it has been targeting workers in the outsourcing sector because of their stable income.

OFWs households should also reduce their expenditures on big-ticket items such as property, motor vehicles, electronics. All of us, actually, should do the same. Let us first take care of our needs before we spend on our wants. Let us spend our income on more productive expenses. Let’s not blow it on the latest gadgets and appliances.

Pay our bills first. Pay off those credit card debts which charge an arm and a leg in accumulated interests every month. If you’ve got car and house monthly payments, you can pay more than the usual monthly payment to lessen the debt. Accrued interests in these loans are about three times higher than the original loan amount so the sooner we pay for them the better.

Let’s think about the incoming semester and save a portion of our income to paying our children’s tuition.

For those who don’t have kids yet, they might want to invest in additional training to add to their knowledge and skills, which would in turn make them more employable or qualified for higher salaries.

And of course, if we can save even just 10 percent of our income, that would go a long, long way.

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