Families relying on money remittance from overseas Filipino workers must be prepared for the day money sent to them regularly would eventually stop coming, TV host and financial adviser, Suze Orman said on Monday.
Speaking at a talk hosted by the Bank of the Philippine Islands, Orman said families who are dependent on remittances must always think that money will not arrive forever. Their relatives abroad can lose jobs, get sick, or even die, according to a report by InterAksyon.com.
“Anything can happen at any time and the problem that is going on out there [abroad] when one person from over there stops sending money in here, you’ve not only affected one person there but also four, five or six people over here. Then that starts the hazardous possibility of things going wrong,” she said, adding that families need to understand where that money comes from to be able to fix their financial situation.
Money remittance from abroad as a lifeline to families, nation’s economy
According to the Bangko Sentral ng Pilipinas, OFWs sent home $25.8 billion on formal channels in 2015, boosting the Philippines’ dollar reserves and helping drive domestic spending. However, only a little of that was used for saving. According to a Citibank survey
As OFW dependents understand better their fund sources, they might just be motivated to keep more.
“You (OFW families) would think twice before you go out and buy a flat-screen TV or you do things other than saving that money,” the financial advisor said.
With Filipino members in her household staff, Orman can relate to the culture of Filipinos abroad, sending their entire paycheck back home, leaving virtually nothing for themselves.
“It goes on for 10, 15, 20 years,” she said.
She, however, observed that in the past two years, her Filipino staff did not go to the Philippines during their month-long holidays. Instead of paying for the plane fare, Orman’s team told her they would keep the money and open a bank account.
“They are afraid they don’t have money themselves, and what are they going to do? And their parents can’t take care of them, their parents just died, or something happened,” she said, noting that her staff realized that they are getting older and not as fit as they did 20 years ago.
Orman also said that it is essential to change the culture of mendicancy among OFW families and that able-minded members of the family are helping out.
“Are we helping those people by sending money to them, so they never have to dig deep themselves and reach their potential because the money is coming into them like clockwork when they haven’t made any contingency plan in case that money stops because they don’t think it will ever going to stop? We may be hurting them rather than helping them/ Because a lot of times they [dependents] are still very young,” she said.
OFWs Should Take Action
As the COVID-19 pandemic has proven the uncertainty of life as OFWs, may it serve as a warning to all Filipino workers abroad to be more mindful of their finances, work towards future-proofing finances and commit to saving for self and family.
OFWs can always avail themselves of government insurance programs such as Social Security System, PhilHealth, and other benefits outlined by OWWA. These programs provide retirement benefits and health coverage for members and their families. However, adding an extra layer of financial security such as signing up for private insurance should be treated as an additional investment for the future rather than an extra expense that burdens OFWs every month.
Talk to an insurance agent on how what’s the best insurance premium that suits your financial and retirement goals. OFWs would be thankful you made the decision to allocate a portion of monthly income to an insurance policy rather than regret spending it on items that they don’t really need.