Toiling for years and nothing to show for it? Here are ways to maximize – and grow – your earnings while working overseas
By Lynda C. Corpuz
Anne Closa has been working in Dubai for three years now. Formerly an accountant, she decided to work abroad after a family misfortune and inadequate attempts to support her immediate and extended family. Robert Alarcon followed the path of most of his friends, applying as a seaman for luxury ships, but ended up as a sales representative for a bike shop in Dubai for the last six years
Bernie Isip, now a senior manager at auditing firm Punongbayan & Araullo (P&A), worked in Saipan as a bank chief finance officer in Saipan. For two years, Mads Dayego, also a P&A manager, and her husband worked as auditors in Pennsylvania.
Stores like this are familiar to practically all Filipinos. It wouldn’t be surprising if every Filipino household turns out to have at least one relative working overseas. Atty. Ding Bagasao, Economic Resource for Overseas Filipinos (ERCOF) president says that Filipinos have become the cheap source of manpower abroad since the early 20th century when Americas needed farmers for their plantations.
Nowadays, the stereotypes of the blue-collar OFW (overseas Filipino worker) and overseas DH (domestic helper) are increasingly giving way to white-collar professionals. “Apart from the domestic helpers that we became known for, there are also women [and men] who dare to work abroad for the adventure of being independent and starting to be economically well off,” Atty. Ding notes.
Unfortunately, stories of overseas and migrant workers laboring for years and ending up with zero or being in huge debt are also common. Iluminada Sicat, Bangko Sentral ng Pilipinas (BSP) economic statistics director, cites, as per BSP’s OFW financial literacy campaign, that most of the migrant workers and their families lack financial know-how, while others have really no sense of financial planning and timeframe to meet their goals. “Most cases, they don’t know also how to or where to put their money for reintegration, or by the time they come back here and stay for good,” she notes.
If you are working abroad – or planning to – you can avoid this cautionary tale. And if you belong to an OFW family, you should do your part to help ensure that your mom’s or brother’s hard-earned savings don’t go to waste. These 10 steps will teach you how to make the most, spend the least, and grow the fastest towards OFW riches.
Step 1: Find the hot job markets. The book Finding Work Abroad: A step-by-step guide notes that in the next few years, the hot jobs can be found in five sectors: cruise ships, hotel and food service, construction, education, and healthcare.
“The demand for cheap foreign labor will always be there. The US alone needs at least one million healthcare professionals in the next 10 years. Other countries also need manpower to work for them,” Atty. Ding notes.
As for OFW destinations in 2008 and onward, Finding Work Abroad lists that the hottest job markets are in the Middle East, particularly Saudi Arabia, UAE, Qatar, Kuwait, Bahrain, and Oman; Asia Pacific, including China, South Korea, Taiwan, Singapore, Brunei, Malaysia, Australia, and New Zealand; North America, namely Canada and the United States; and Europe, particularly the United Kingdom, Ireland, Spain, France, Germany, Italy, Norway, Finland, Belgium, Sweden, Denmark, Greece, Netherlands, Iceland, Romania, Czech Republic, and Azerbaijan.
Step 2: Pay off your debt. Once you have a job offer, it’s time to pay for your way. Melvin Esteban, Generali Pilipinas senior vice president for non-life and bancassurance and a registered financial planner, notes that most OFWs spend around P100,000 for placement fee, visa, and ticket. “Mostly, those low-income OFWs have to work around three to six months to pay off their debt for leaving here. So before you decide to work abroad, know the real cost of going there, and what your options are to finance your trip,” he states.
Anne, for instance, took out a bank loan here and sought her aunt’s help to finance her ticket and visa. Good thing that in just a week’s time from her arrival, Anne got a job as a materials controller at one of the subcontractors involved in building Dubai’s Airport Terminal 3.
Avoid borrowing from money lenders that charge usurious rates. You might end up working for months, even years, just to pay off your loan. “If you still need to pay debts you incurred in going abroad, let that be your goal in the first six months of your work. Pay your debts diligently,” he advises.
Step 3: Watch your cash flow. Melvin notes that most OFWs are given cash for their salary so the tendency is to overspend at times. “Magagastos mo talaga ang pera mo kapag ganoon. Kaya nga itago mo agad – kapag hindi mo nakikita, hindi mo magagastos` yun,” he points out.
Robert kept a small notebook where all his incomings and outgoings are written to see where the money went for the month. He sends 30% of his salary to his mother and 50% would be for the rent and utilities he had incurred for the month, which he pays to his friend. He keeps the remaining 20% as his savings or what he calls his emergency fund.
Bernie prepared a 12-month cash flow report, reflecting his savings after deducting expenses from income. “Dinedeposito ko agad `yung ipon ko. It’s always the first priority. And my family and I survived on my previous income here, that was why we saved,” Bernie illustrates. He maximized his cash flow when his contract was renewed, and his wife who was left here, kept to the budget. “We got to save about 50% from every income,” he notes.
Step 4: Run a tight ship. To maximize your remittances and savings, you really have to make some sacrifices. Cathy learned to cook and laundry when she was in Dubai as a way of saving money. With her friend as house mate, they allotted for their food and went to the market to buy everything they needed on a weekly basis. “Kasi kung sa labas ka kakain, mahal talaga. The malls were inviting also but ang kagandahan lang doon, hindi ako masyadong nakakabili kasi malalaki `yung sizes. Ang mahal lang talaga roon, `yung apartment, kaya naka-budget ako talaga,” Cathy shares.
Mads, meanwhile, shares that when they had to hire a car, they made sure to do everything they set out to do on a weekend. “Ang mahal ng rental. Once, we were charged an extra $300 dollars since the car was still with us on a Monday. Nakipag-away na kami sa car rental noon. So we made sure we knew when we needed to return the car to avoid penalties,” she states.
On top of this, they also cooked their own meals, like they brought rice to the office and ate at the pantry or made sandwiches when they were out for client meetings. “We went to the market weekly and always bought our baon. Unlike here, minsan magkayayaan lang mag-fine dining, sige, pero roon, pag-iisipan mo talaga,” Mads says.
Step 5: Keep your remittance fees in check. A major money drainer for OFWs is the cost of remitting funds to your family back home. Before going to Saipan, Bernie opened an OFW joined account with the Philippine National Bank. “Malaki `yung discount nila sa mga OFWs. Dahil nag-trabaho naman ako sa bangko rito, kinaibigan ko `yung manager, kaya minsan na-we-waive niya `yung remittance fee. Joint account kami ng misis ko para kahit wala ako, nakaka-withdraw niya. Mahirap `pag walang account sa Pilipinas ang OFW, kaya dapat bago umalis, naasikaso na nila ito,” Bernie notes.
Mads says they really set their remittance schedule every six months. “There was a charge of about $20 per remittance. So we thought of that schedule kasi nanghihinayang din kami sa remittance charges. Hinahabol din namin na bumaba ang dollar,” Mads shares.
Catherine Quilantang, a P&A senior manager, worked for Dubai for a year as a tax compliance officer. Although she was not obliged to send money to her parents and sibling, Cathy shares she still sent part of her income to them. “Nag-papadala pa rin ako monthly. Doon naman sa Dubai, marami namang mga remittance outlets. Sa bank, mga two to three days bago mapadala rito. Kaso mahal sa mga remittance outlets, kaya through the bank pa rin ang padala namin, two to three days din lang naman, makukuha na,” she shares. Cathy gets to save around 50% to 60% of her income.
Step 6: Get insured. Most likely, as an OFW, you are the sole, or primary, breadwinner. What if something terrible happens to you? You have dependents back home who may end up with nothing. “That’s why they have to insure themselves when abroad – sinugal na nila ang buhay nila roon, kaya dapat protektahan nila ang kanilang sarili at ang kanilang kita. They should have insurance to cover them,” Melvin advises.
Insurance may not be the first thing you have in mind – and you probably couldn’t afford it at the start – but once you get your cash flow going, you should make this a priority. Remember, at this point, your family’s major investment is you.
“Lagi kasi agad nakikita `yung kita. Malaki nga ang suweldo mo? Pero ano ang puhunan mo – ikaw mismo bilang OFW. Dapat protektado mo ang sarili mo at ang pamilya mo,” Melvin stresses. “Low-income OFWs are vulnerable to market changes, that’s why they should have a buffer,” Iluminada stresses.
Step 7: Stick to the budget. Not just you. Your beneficiaries are the ones who really ought to manage your remittances properly. Mads notes she made sure that every expense was justified. “I asked them to keep track of all the expenses, keep the receipts, and record in a notebook, so I could also check with the things I itemized for my baby’s needs. We encourage our families to stay within the budget. And we monitor withdrawals online so we knew how much was being spent,” she illustrates. Apart from the savings, she also set aside a contingency fund of about P5,000 for their families’ and baby’s immediate needs.
Your loved ones here must also live within their means and keep a low profile, Bernie says. “Buying luxurious things is the perceived mindset among OFWs and their families – karamihan sa kanila wala ng mga bagay na `yun noon, kaya ng may nakapag-abroad, `yun agad ang inuuna,” Iluminada observes.
The obligation to give because you love your family and to compensate for their absence at that is the reason most OFWs are not able to save. “Habang nag-iipon ka sa ibang bansa, dapat din, nag-iipon ang pamilya mo rito. Hindi puwedeng padala ka lang ng padala, hindi ka talaga makaiipon,” Atty. Ding notes.
Always save, Iluminada advises. “Isang krisis, wiped out ang kita mo, kaya dapat may ipon ka talaga,” she illustrates. “Always think about your future and save for that,” Anne stresses.“OK lang naman na minsan matikman mo `yung sarap ng pinaghirapan mo, pero dapat isipin mo rin kung paano mo gagastusin ang pera mo,” Robert advises to his fellow OFWs.
Step 8: Invest your earnings. Make your money work for you, so sooner rather than later, you can stop working for money. Most OFWs aim for low-risk investments with guaranteed return, but better if the principal is also guaranteed, Melvin notes.
“Every investment vehicle nowadays wants a slice of the OFW market. There are a lot of safe instruments where they can put their money on. While there are many financial products that reach out to them, they must read the fine print,” Melvin advises.
And with two-thirds of the OFWs coming from the countryside, ERCOF encourages these migrant workers to plow back their remittances to invest in their hometowns, Atty. Ding shares. “Mas logical kung doon sila mag-i-invest kung saan sila babalik. Initially, we introduced to them time deposits offered by rural banks. We got also into dairy investments, choosing and buying cows for the OFWs,” he shares. Currently, they forged an arrangement with select dairy farms, and 40% each goes to the OFW and the farm, while 20% goes to ERCOF, the processing farm, and insurance of the cows.
Wanting to provide more, Anne invested some P300,000 of her savings into a lending business, which was owned by her friend’s relative. “Siyempre mahirap mag-invest. Pinagpaguran mo tapos mawawala lang, kaya matagal ko talaga siyang pinag-isipan. Inisip ko nariyan naman `yung officemate ko, so kung magka-problema at least may direct contact ako –` yung officemate ko,” Anne recalls.
After a month, the investment had an interest of P15,000 which then became the money allocated for the family’s monthly expenses. “Pero minsan nagpapadala pa rin ako especially kung may unexpected gastos tulad ng may nagkasakit o minsan `pag na delay` yung pag-deposit ng interest sa account namin,” Anne shares. For something like this to work for you, investigate thoroughly what you’re getting into and who you trust your money with.
Robert, on the other hand, helped out his mother to save their house by paying his sister’s debt to their aunt. He applied and was approved for a loan, and it was agreed that once cleared, Robert would be the owner of the house.
He first thought it to be a “stagnant” investment, but since the house was close to the malls and schools, it was developed into a semi-boarding house, divided into five rooms and has been operational since 2006. With the house being a decade old, Robert had to maintain it regularly. “When I went home for a short leave last February, I decided to renovate the ceilings, repaint the whole house, and replace the plumbing,” he shares. That minor renovation cost him P30,000 and although not a full makeover, it should be enough for the house to be in tip-top shape for the next few years.
Melvin also warns OFWs and their families to be careful from being victimized by scams: “Some of them get into such schemes hoping they would earn more money.”
Step 9: Love your family – but love yourself too. It is all right to help, especially if your reason for leaving is to provide a stable future for your family – but it is also all right to say no at times, our OFWs agree. “We always aim to please – hirap tayo tumanggi. It’s a cultural thing and it will take time to change that. Pero, hindi nga naman puwede kada uwi mo rito, mag-se-celebrate kayo ng mga pamilya at kamag-anak mo, pati ipon mo tiyak magagalaw mo `pag hindi ka matutong tumanggi,” Melvin warns. “Bago sila umuwi, dapat may budget sila na ito lang ang puwede nilang gastusin pang-treat, para hindi nila magagastos `yung sa savings,” Cathy suggests.
“Kaya minsan mas OK umuwi ng Holy Week, wala ang mga tao. Kapag Pasko, makikita mo ang mga kamag-anak mo na hindi mo alam kamag-anak mo pala,” Bernie jokes, but seriously, “Hindi biro ang mag-abroad, OK lang tumulong, pero hindi lagi, hindi ka naman nagmamaramot kung tatanggi ka paminsan-minsan,” he says.
Also, no matter how you deliberate over a financial matter, sometimes, your family here gets to override it, much to your dismay, as what Mads shares that when she allotted P1,000 each for her godchildren, her in-law also gave the same amount to those whom she assigned a lesser amount to give for that Christmas. “Ang tagal ng deliberation naming mag-asawa roon, tapos sa isang iglap, ma-o-override lang `yun. Medyo nakasasama lang ng loob kung minsan, kaya sinasabi ko, kung kailangan walang emosyon, tatanggi kami kung tatanggi kung kailangan,” she says.
And above all, always pay yourself first – that is what an OFW should always remember to achieve financial success, Melvin stresses. “For the families of OFWs, try to put yourselves in their shoes. If you say you love them by telling them you miss them, show them also you care for them by caring for their hard work abroad. For the OFWs, learn to say ‘no’ at times. Hindi mo naman tinatanggal ang obligasyon mo sa pamilya mo, pero isipin mo rin ang sarili mo,” he points out.
Step 10: Break the cycle. The culture of dependency is also another reason why most OFWs don’t have money of their own or nothing to start with for their reintegration, Iluminada notes. She also cites cases when a member of the family gets to work abroad, those who remain here opt to quit working, either to take care of their elders or their children, and thus, all of them become totally dependent on the OFW.
“Before you help those outside of the family, make sure you and your family are well-placed – that’s what we teach in our financial literacy program for OFWs and their families,” Iluminada shares. For this, Anne says although her current job is not her dream one, she is fine as long as it addresses her and her family’s needs. The P300,000 investment Anne had is now divided into a fixed instrument and they have decided to purchase a house, and perhaps, revive their carinderia since her father is a good cook. This creates a stream of income that is not dependent on your hard work. Your family shares the responsibility of being productive and generating income.
Here’s something to be optimistic about: The BSP second quarter survey shows close to half of OFW households are becoming savvy in investing the remittances sent to them: from 21.9% in the first quarter, 48.6% of them now allot their money for various financial instruments, presumably stocks, bonds, or insurance; 31.4% set aside money for bank savings, and about 14.3% of them are saving to buy a house.
With your remittances being spent and invested wisely, and your family members become producers and not just consumers of income, you will certainly be on your way towards OFW riches. – With interviews from Rachiel Alarcon
[This article first appeared on the July-August 2008 issue of MoneySense magazine]
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