Families need to talk frankly about money matters

Many Filipino families have a hard time talking frankly about money matters—especially with the children. Not many families of overseas workers understand or realize that their loved ones overseas live month-to-month on their entire salaries. They want to move away from the hand-to-mouth existence to create better lives.

I asked financial planning expert Vince Rapisura from the Social Enterprise Development Partnerships, Inc., an organization that trains overseas Filipino workers (OFWs) to be financially independent, to shed some light on this matter.  He made me realize the missing ingredient needed before any financial program or plan can work is healthy financial communication.

Do we know how OFWs have been doing in planning their financials?

VR: Based on our research, 98 percent of OFWs working as nonprofessionals abroad are in the start-up stage.  This means that they do not have emergency savings; they do not have insurance or if they do, the coverage is inadequate and they do not have anything planned for retirement.

So how do most OFWs spend their hard-earned money?

VR: OFWs typically place their hard-earned income in nonproductive assets and consumption due to the lack of financial planning and skills. When I talk to OFWs abroad especially the nonprofessionals, they equate sending their children to school, building a house, buying tricycle, or establishing a small business with achievements.  These are confirmed by the beneficiaries during our training sessions for them in the Philippines.

These achievements are not necessarily bad, but they necessitate that OFWs live abroad indefinitely.

In addition, OFWs rarely talk honestly with their family members, especially kids, about their financial state to help them understand the importance of prudent expenditure.  It is common to see OFW parents buying expensive items, such as cell phones, for their children to compensate for their absence.  As a result, their kids take money or expensive gifts from their parents or relatives for granted.

What is your financial advice for OFWs?

VR: Honest and clear communication with your family members on your finance and savings plan are very important.  Don’t be swayed by emotional or psychological warfare.  A practical strategy here is for OFWs to cut down the number of times they say ‘yes’ to any unplanned financial requests back home.  By saying ‘no’, you would be able to save.

We also suggest OFWs share the financial responsibility with their beneficiaries, for example, having them manage daily household expenses such as food, electricity, rent and other utilities.  The tendency is a lot of OFW families are highly employable but choose not to work or do not get pressured to get a job because of the remittance support.  Remittances should be used primarily for productive or developmental expenses that the family previously could not afford.

The responsibility of a parent to a child should stop when the child reaches 21 years old, or when he or she finishes college. We advise OFWs to talk to their children and tell them that their allowance will only be good up to three months after they graduate.  This in effect will force them to look for a job and empower them.  If they choose to live in the house of the parent, make them pay a share in the household expenses such as food, rent and utilities.

It is also an unhealthy emotional attachment to money that stops a lot of OFWs from budgeting and saving.  Our strategy is to help OFWs understand and accept their current status. In other words, we help identify the emotional baggage that they have and address them.  Only then can they be able to act logically.

Vince is the president and CEO of SEDPI Group of Social Enterprises and the program manager for the Ateneo de Manila University Microfinance Capacity Building Program. Visit www.sedpi.com for more information.

Patricia Riingen is a wife, mother of three, and the senior vice president of Western Union for East and South Asia.  For questions and comments, e-mail [email protected]