OFWs must be financially literate

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Atty. Dodo Dulay

Atty. Dodo Dulay

IF you ask Filipinos why they want to work abroad, most, if not all, would say they would like to make more money so that they can provide a better life for their families in the Philippines. Clearly, our kababayan see overseas employment as a path to financial freedom.

Yet, I have personally witnessed how many of our overseas Filipino workers (OFWs) come home with little to show after decades of toiling abroad away from their loved ones. Some are even chronically mired in debt even though their salaries are twice or thrice that of most rank-and-file workers in the country. Apparently, for many of our migrant workers, financial freedom appears to be an elusive goal.

Financial advocates I’ve talked to say that this is because a majority of our OFWs are not financially literate. The statistics seem to support this view.

According to a 2016 Mastercard survey, the Philippines’ score and ranking in the financial literacy index declined four points from the previous year. Filipinos ranked 10th in terms of basic money management such as budgeting, saving and responsible credit usage, down seven places from its previous rank.


The country ranked 11th among 17 countries in the Asia-Pacific region based on financial planning, knowledge of financial products and services, and the ability to make long-term financial plans. The Philippines was at No. 12 when it came to investment knowledge, such as basic understanding of investment risks, investment products and investment skills.

Meanwhile, a Standard & Poor’s (S&P) Ratings Services survey found that only 1 in every 4 Filipino adults is financially literate. The Philippines was grouped with the West Bank and Gaza, Burundi, Bolivia, Honduras, Sierra Leone, Sudan, Kosovo, Nicaragua, Bangladesh, Kyrgyz Republic, Haiti, Tajikistan, Angola, Somalia, Afghanistan, Albania and Yemen, among others, in the bottom of the survey.

Without financial literacy, the goal of many OFWs to be financially free is unattainable. Financial literacy is the key to attaining financial freedom. While there has been a massive growth in foreign currency remittances from our migrant workers, this has not translated into financial freedom for most OFWs and their families.

Bangko Sentral ng Pilipinas (BSP) data showed that OFW remittances hit a new record high of $26.9 billion (or P1.4 trillion) in 2016, up 5 percent from the previous year. Cash sent by OFWs through our banking system is so big that the Philippines is the third largest recipient of remittances after India and China, according to the World Bank.

So where does all this money end up? Based on the BSP’s Consumer Expectations Survey (CES) for the second quarter, 97 percent of the 434 households included in the survey used the remittances to purchase food and other household needs while 68 percent allotted part of the remittances for education. The survey also revealed that 60.8 percent of OFW households allocated part of the remittances for medical expenses, 43.1 percent to pay debts, 25.3 percent to purchase consumer durables, 16.4 percent to acquire a house, and 7.4 percent to buy a vehicle.

It comes as no surprise then that only two in every five overseas Filipino workers (OFWs) are able to save from their cash remittances, according to government data, and of that number, six out of 10 migrant workers are only able to save less than 25 percent of the total amount received. Consequently, an average OFW would have to work abroad for close to 18.11 years, or 217 months, to be able to save P3 million and return to his family, based on a study commissioned by a private insurance company.

Money advisors all agree that if the OFW fails to save enough cash or to invest wisely, they will come home with hardly any assets. This is why financial literacy is crucial knowhow that all migrant workers should possess. Educating our OFWs on how to handle their finances will help them avoid the common money mistakes of migrant workers. And there are a lot of them.

First and foremost is the lack of financial goals. Most migrant workers do not plan ahead. A lot of OFWs believe they can keep working overseas forever. But overseas employment is temporary at best. A financial crisis, a sudden illness or an unfortunate accident can always cut short an OFW’s work abroad.

Another gaffe that many OFWs commit is overspending or over-remitting. Of course, there is nothing wrong with helping out your family financially. However, family members back home should not be too financially dependent on their OFW relative. But this might be a bit hard to overcome.

A study by the International Monetary Fund (IMF) revealed that many OFW families are refusing to work on their own and rely too much on remittances sent to them, with extended families like parents-in-law, brothers or sisters-in-law, cousins or even distant relatives expecting to be helped out by the family member working abroad.

The absence of an emergency fund is another money mistake of OFWs. Meager savings can be easily depleted when emergencies happen. Without an emergency fund, OFWs are obliged to borrow money from their friends or worse, take out loans at usurious rates.

To prepare our OFWs for managing their finances while abroad, the pre-departure orientation seminars (PDOS) conducted by the Overseas Workers Welfare Administration incorporates topics on financial literacy. The agency’s regional offices also conduct regular financial literacy and values reorientation seminars for the families of OFWs in order to teach them how to handle and invest the money they receive from abroad.

OWWA will soon be rolling out a more comprehensive and enhanced financial literacy program so that our OFWs can acquire the skills needed to secure—and ensure—their family’s financial future.

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