As an OFW, it’s important to effectively manage finances abroad. This will help you plan well for your needs and goals while staying safe from the risks that come with being an overseas Filipino worker in Canada. Of course, by not being able to manage your finances abroad properly, you risk not being able to achieve your dreams and goals – which in reality, is an all-too dangerous risk you shouldn’t put yourself in if you can help it. You can avoid this altogether by simply managing your finances well. But the truth is, it’s not as simple as it sounds.
This article will share some tips to help you better manage your finances abroad. This is especially important since we’re now approaching the end of the year when most of us have a lot of expenses to handle.
- Finance Management Tips for OFWs
- Video: 6 Ways on How OFWs can Save Money Abroad | OFW Savings Tips
- Final Thoughts
Finance Management Tips for OFWs
Without further ado, let’s take a look at the tips and tricks that would help you better manage your finances while working overseas.
1. Have a Goal in Mind
Before you begin to manage finances abroad, it is essential to have a goal in mind. Having a specific goal will help motivate you to work hard and stay focused on the task at hand. It may also help give you direction when times get tough. You can set long-term or short-term goals depending on what works best for you.
Long-term goals can be something that you want to achieve in the next five to ten years, while short-term goals are those that you want to achieve within a year or two. For example, let’s say your long-term goal is to buy a house when you return home from working overseas. If this is the case, then you may want to set aside some money each month so that you can use it as down payment when buying a house. On the other hand, a short-term goal might be saving up for a vacation or buying a new phone.
It’s important that your goals are specific and measurable because this will make it easier for you to determine whether or not your efforts have been successful. To keep you focused, you can use the S.M.A.R.T. framework. This approach stands for Specific, Measurable, Attainable, Relevant and Time-bound. Using this approach will help you to identify what exactly it is that you want to achieve and whether or not this goal can be achieved in the specified time frame.
So a sample goal framed using the S.M.A.R.T. approach would be like, “I want to increase my savings by $500 per month by the end of October 2022”.
2. Create a Practical Budget
Creating a budget is one of the most important steps you can take to manage your finances better while abroad.
For starters, knowing how much money you’ll have available each month is important. This will be affected by your job type and how much money comes in per paycheck. It may also be helpful to keep track of any additional income sources (e.g., gifts) that may come your way throughout the year.
Once you know what your salary is, examine just how much living expenses are going to cost each month—rent or mortgage payments; utilities (electricity, gas); groceries; transportation costs like public transport tickets or taxi rides; entertainment expenses like going out for dinner with friends; travel costs if applicable such as international plane tickets home for Christmas break or summer vacation at home back in the Philippines or elsewhere. You might even want to include school fees for kids if applicable because these add up fast over time too!
One basic way to plan your budget is the 50/30/20 rule, where you spend 50% of your income on living expenses, 30% on savings and paying off debt (if you have any), and 20% on personal expenses. This is a great way to ensure that you have enough money for everything you need plus some left over for entertainment or other luxuries like going out for dinner with friends at least once every two weeks.
3. Avoid Using Credit Cards
There are a lot of credit cards out there, and it might seem like a good idea to use one when you’re abroad. But this is a mistake. Credit cards have become incredibly popular, but they aren’t always the best way to manage your money. Many people have problems with overspending and debt because of their credit card use–and OFWs can be especially susceptible to these issues.
Avoiding credit cards will help you keep your spending under control, which is important when you’re living abroad with limited resources and time for managing your finances.
And it’s not enough that you don’t spend on credit, but your family back home also shouldn’t be allowed to do so. If your family members are using credit cards, they could be making mistakes that might affect your finances. It’s important to set boundaries and not let them spend money on credit if you don’t want them to do so. This practice will not only reduce your expenses, but it will also (hopefully) teach them the value of the money you earn overseas.
4. Save More and Spend Less
There are actually several ways for OFWs to save more and spend less. For example, you can set aside a certain amount of money every month for savings. This way, you won’t have to worry about spending it all on your needs (and wants). You could also try living below your means, which is basically about not spending more than what’s already allocated for each expense category in your budget plan. Other clever yet practical ways to limit your spend and boost your savings include the following:
- Cook at home, or eat out less by going to cheaper restaurants or offering discounts for take-out orders.
- Use coupons, especially when shopping at grocery stores. You can sign up for the store’s club card which will give you access to weekly deals and special offers that may not be advertised on the store’s website or social media page. You can also search online for printable coupons via coupon sites in your location. These sites often provide free printable coupons even if they aren’t available in your area; some even offer digital versions!
- Shop secondhand! Thrift stores sell brand new items at affordable prices, meaning there is no reason why anyone should ever buy something used again—unless it has sentimental value attached.
After all, splurging on too many material possessions can make it difficult to live comfortably. And when you’re not able to cope living abroad, it can be hard to keep up with your finances. By tapering your expenses, beginning with yourself, you’ll be able to afford a more comfortable life.
5. Invest Wisely
Now that you’ve saved up enough money and are ready to invest, it’s time to look at your options. The best way to go about this is by learning the basics of investing in stocks, bonds and mutual funds.
Investing in property is another great option for OFWs who want to make sure their money stays safe while still earning returns on investment. You can buy properties such as houses or condominium units; however, these aren’t liquid investments so you’ll have to wait until the property sells before you can take out any cash from it. Alternatively, if you’re looking for more liquidity with your investments then stocks are a good choice because they’re easy to sell when needed without giving up too much profit (or any loss).
While stock market trading can seem intimidating at first glance due to lack of knowledge or fear of risk-taking losses, there are several ways available today where even beginners can start trading stocks easily without having prior financial experience before coming abroad. To learn more about smart investing for OFWs, you can follow our blog.
6. Choose Carefully Who to Lend Money to
Sadly, it does happen that we lend money to people who can’t pay us back. If you choose to lend money to friends or family members and they don’t pay you back, there’s not much you can do other than being angry and hurt by your friend or family member’s behavior. But if the person is financially stable, trustworthy and has a history of paying back loans, then lending them some money might be worth it.
This oftentimes is one of the weaknesses of OFWs since more often than not, people back home are the ones who ask for money and it can be hard to say no. If you decide to lend money, make sure to set up a repayment plan that both parties agree on and stick with it. By instilling discipline on how you manage your finances on your own, can translate to how you choose where or whom to lend your money to.
If you are about to lend money, make sure:
- The person is financially stable
- You can trust him/her.
- He/she has a history of paying back loans, etc.
By limiting the profile of people you want to lend your money to, you can better manage your finances and prevent yourself from getting into a sticky situation, which could oftentimes hurt not only your credit score but also your relationships. As Filipinos, while we may be known as “givers”, we should also learn how to say no. It isn’t easy but it certainly is worth the effort.
OFWs can manage their finances abroad with the right mindset and discipline.
With the right mindset and discipline, OFWs can manage their finances abroad.
- Have a financial plan. A financial plan is crucial for OFWs to secure themselves from unexpected expenses such as medical bills, emergency repairs on their houses, school fees for children and so on. This way they can make sure that they have enough savings in case of emergencies or sudden needs.
- Build a budget. Creating a budget is important because it helps you focus on where your money goes every month. It will also help you identify areas where you can cut back so that you can save more money for other things like investments or other savings like buying a house one day in the future.
- Save as much as possible while working abroad through banks/credit unions or investing in stocks/mutual funds etc., so that when they go back home they will be able to invest this money wisely into something that could potentially grow over time (i.e., stocks). This way these people become financially secure after retirement age since those who do not worry about saving up enough money during their working years usually end up living paycheck-to-paycheck when retired at 65+ years old since their income shrinks significantly due to lack retirement benefits provided by companies anymore (like health insurance coverage), thus making it difficult for them to pay for their medical bills, food, housing and other basic necessities.
Video: 6 Ways on How OFWs can Save Money Abroad | OFW Savings Tips
So you’ve been planning on staying in the Philippines for good, but you don’t know where to start. Here’s a short video to help you plan for your retirement and save money for the future. As they say, the sooner you begin saving up for your future, the sooner you will be able to retire.
And what better way to retire than be financially secure, relaxed and ready to enjoy your twilight years? If you’ve been really diligent with your savings, you could even find yourself in the position to help your loved ones with their own retirement plans. Thus, keep all the things you’ve learned here in mind (and heart) as you get ready to start your own retirement planning. There’s nothing quite as empowering as knowing that you have made the right choices for your future and can look forward to an enjoyable retirement.
We hope these tips will help you manage finances better abroad. Remember that even though you are away from home, living a happy and fulfilling life is still possible. Remember that the important thing is not how much money you have but how you spend it! And when you’ve saved up just enough or a bit more for yourself and your family, you can be sure that all those years you’ve spent working and living away from your family won’t have been in vain. At the end of the day, all you need is to be happy and enjoy your life.
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