It is a dismal scenario that keeps on repeating itself. An Overseas Filipino Worker ( OFW ) spends 10 or more years abroad, goes home for good — and after a year or two of economic comfort, relapses into financial difficulty.
He starts selling his gadgets, the extra TV set and then, the car. He finds himself on the same sorry spot where he was 10 years ago. Or sometimes, even worse. Because this time, he is much older, sickly and unemployable. According to a study released in 2011 by an NGO, the Social Enterprise Development Partnerships, Inc., this happens to eight out of ten OFWs. Other studies yield similar The main reason, of course, is that the OFW is unable to save money and prepare for his retirement or permanent return to the Philippines.
According to research, only 15% of OFWs have regular monthly savings. The Colayco Foundation suggests that 20% of the monthly income be set aside for savings. However, the great majority of OFWs and their families are left with nothing at the end of each month. Most likely, they are sending two or three children to college — and at the same time, paying for other expenses at home. We have to give them credit for that because those are heavy responsibilities. However, financial experts say that the economic backslide can be averted.
How can OFWs achieve real financial stability?
At this point, let us mention some valuable insights from the works of Thomas Stanley, a financial expert and author of several books on personal finance. Three of his books are The Millionaire Next Door (1996), which he co-authored with William Danko, The Millionaire Mind (2000) and Stop Acting Rich (2009). In the course of writing these books, Stanley closely studied the lives
of hundreds of millionaires. Aside from collecting and analyzing secondary data, he also got to interview many of the millionaires.
Before we go further, let us distinguish between “real millionaires” and “acting like millionaires.” Real millionaires have high incomes but spend much less — so, they actually have a lot of money in the bank. This is in contrast with those who are just “acting like millionaires.” These are people who also have high incomes — but spend the same amount or much more. So, they actually have little or no money in the bank. Just one misfortune, like a fire razing their house or a sickness, and these “acting like millionaires” will go begging from their friends.
Back to the works of Stanley. Of course, he was able to identify several factors that led to the millionaire’s wealth — like a knack for business. I will leave the discussion on that to the pros.
However , Stanley discovered two things that we can all relate to: most real millionaires live simple and frugal lives. Yes, simplicity and frugality. Unfortunately, these are not easy traits to acquire. Simplicity and frugality require an overhaul of the way we think, feel and act. They require wisdom and will power.
The millionaires that we see on TV — those donning Armani suits, sipping champagne in their private jets and yachts, and driving around in the latest Bentley and Rolls Royce models — are not representative of the millionaire population. Many of them prefer anonymity over popularity. Many of them use ordinary and inexpensive brands. Many of them buy late-model cars instead of newly-released ones. “The pride of owning a brand new car wasn’t worth the $US20,000 price difference,” says one. A study in the US reveals that 86% of buyers of high-end vehicles are “acting like millionaires” — not the real ones.
Most millionaires buy Ford or Toyota, not Mercedes-Benz. Stanley also found out that many of the millionaires do not wear luxury clothes and expensive watches. They know that the people they have to deal with do not make business decisions based on the price of their car, clothes or watch. ( How often do you see Facebook founder Mark Zuckerberg wearing a suit? He wears a t-shirt most of the time!) Another study shows that 75% percent of the members of elite country clubs are , yes —you guessed it — “acting like millionaires.” . Most of the real millionaires do not even care about these clubs. Here’s another thing : most of the millionaires’ wives are strict with their household budget . These things may be unbelievable for ordinary people like us — but, those are the words from the horse’s mouth.
Now, let us take a look at the lifestyles of many OFWs and their families. The excitement and optimism of having an OFW in the family usually go overboard. They begin to live a life of extravagance. They buy things they never had before: smart phones , plasma TVs and booming stereos. They regularly go to mall sales to get flashy accessories, trendy shoes and branded clothing “at bargain prices.” They now hang out in fancy cafes and restaurants. Children now go to expensive private schools, clad in fashionista style.
With higher income in hand, the OFWs and their families now embark on higher spending spree. At the end of the month, or even before the end of the month, their pockets have bled dry. Zero savings. What factors cause this reckless overspending? Why do many of us fail to be simple and frugal?
First, let’s take a look at how consumerism has tainted our concept of happiness. Modern society is extremely attached to material things. Thanks to the media and businesses that aggressively and in many cases, deceptively, promote extravagant living. They have made most of us believe that their products and services are indispensable to happiness. Every single thing they could possibly sell: quarter-pounder burgers, whitening lotions, opulent home decorations, movie treats and so many others. You need this. You need that. Buy this. Buy that. If we are not vigilant about these marketing ploys, we will give in to the temptation and lose money over things we don’t really need.
We should teach ourselves and our families not to depend on expensive material things and services for happiness. Also, let’s take a look at small items that rob us of our savings. A cup of cappuccino. A vase on sale. A round of beer. A bag of potato chips or slices of pizza. A pack of cigarettes. It’s so easy to pick them up. They seem cheap. But if you add how much they cost over the years, you would be shocked. The accumulated price of these little things, let’s say even for just two months, is enough to pay for a month’s water and electricity bills.
Now, let’s examine our “excesses.” We usually justify a purchase because it is cheap. Well, that t-shirt may be worth P150 only, but if your son already has dozens of t-shirts, then, that shirt becomes a bad purchase. OFWs and their families accumulate a lot of clothes, toys, household items and non-essential stuff. Just how many toys does a child need? And how many pairs of shoes or shoulder bags do you really need?
Research also shows that many OFWs overspend on homes and home improvement. Well, building a second floor in a flood-prone area is necessary, but not those fifty or so vases and angel figurines that gather dust on the shelves. When it comes to house interiors, “minimalism” is best. The less clutter, the better. Extensive house beautification is also very impractical in a country that is so susceptible to natural calamities.
This is what Stanley says about homes: “My research has found that most people who live in million-dollar houses are NOT millionaires.” He also discovered that most millionaires in the USA live in homes worth only US$300,000. or lower. Moreover, they avoid buying homes in high status neighborhoods because that would force them to buy expensive furniture and cars to blend in. Brilliant thinking, right?
So, whether you are looking for a shirt or a house, be smart and exercise self-control. If you do not stop this unbridled consumerism and blind conformity , your money would go down the drain. The second thing we have to look at is “overcompensation” for lost time. Most OFWs compensate for lost family time by splurging. Shopping sprees. Grand vacations. If you do this –- again,
say good-bye to your savings. Whatever you do, lost time can not be recovered. Never. Not even by an expensive vacation. The best thing you can do is to save money so that you will not prolong your absence. While you are still trying to grow your money, be contented with little pleasures. A simple picnic at a nearby resort can give you as much joy. If that is the farthest your budget can take you, so be it. That’s fine. Enjoy the moment with your loved ones and be comforted by the fact that you still have some money left. So what if your neighbors and friends are having their picnic at Boracay?
Believe me, many of them are broke after the trip. And those giant balik-bayan boxes are also a part of this “overcompensation.” Again, many OFWs lose their heads when their vacation draws nearer. It’s time for unlimited pasalubongs and zero savings. Don’t be pressured to give something to the whole clan. Give gifts only to close family members. Remember, people who truly love you will continue to do so even if you don’t give them anything. They will even discourage you from buying so many stuff. So , stop giving a damn about what other people will say.
The third factor we have to discuss is the undue importance we give to social status appearances. We like to brag. We like showing people that we’ve gone places. Just look at your Facebook newsfeed. Photos of cars, smartphones, jewelry, bags and other status objects. Check-ins at upscale restaurants and hotels.
Why is it many Filipino homes have perfect balconies but lousy comfort rooms? Because the balcony is what the neighbors see — not the toilet. We would rather impress other people than give our family a clean, well-equipped toilet. That’s ridiculous and stupid. We have to put an end to these empty apperances. Let’s put our money on things that really matter.
Education is another issue. Send your children to public schools. Take advantage of this free or affordable education. This will save you a lot of money. Because of the improving compensation package, public schools are now attracting highly competent teachers. Contrary to stereotypes, education in government schools has substantially improved in recent years. Of course, it’s not as comfortable as the air-conditioned rooms in private schools. But your kids will manage — like the millions of other Filipino kids who do. Meanwhile, you can put the money you saved into business.
The above are just some of the key factors that affect the OFWs’ financial standing. Reflect on how you fare in terms of simplicity and frugality . Constantly remind yourself and your family of your priorities: for example — home mortgage, educational fund or business capital.
Control your urge for immediate gratification of short-term whims and, instead, work for more enduring rewards — such as financial security for the family and your retirement years.
Ninety-five percent of the millionaires profiled by Stanley said that self-discipline is an important component of economic success. Can we muster the will power to do what they do? It won’t be easy. Materialism, vanity, pride and social pressures can easily get in the way. But let’s try our very best.
Let’s learn the lessons from these millionaires. Be simple and frugal. Eventually, we can reach our ultimate goal: to go home and have a happy, secure life with our loved ones — the most precious wealth of all.
Marily Sasota Gayeta is currently an English lecturer in Salalah City, Oman . She has held this job since September 2013. Before coming to Oman, she was also an English lecturer in Sebha City, Libya for three years. Marily studied Bachelor of Secondary Education major in English at Tomas Del Rosario College in Balanga, Bataan ( her hometown ) and earned her MA in English Language Teaching from the Philippine Normal University. Her career, which spans more than 20 years, also includes teaching Vietnamese refugees in a training camp in Bataan , and teaching collegiate English in three private colleges in the same province. She enjoys watching action movies, listening to rock songs, reading and writing . Her articles are available on her blog at www.gardenerofthoughts.blogspot.com. Marily is married and has two children.