Here’s the sad truth: every time an OFW or seafarer receives something, they prioritize their spending on their relatives and remittances, and whatever is left, they consider their savings to be their least concern. With this in mind, we’ve come up with a simple compilation of OFW budget tips to help our kababayans grow their savings more effectively.
Also Read:13 Best OFW Loans in the Philippines (Banks and Government Agencies)
Prior to receiving their salaries, our overseas Filipino workers must ensure that they have a financial plan or a budget in place. A set amount that they can comfortably afford to pay each month should be included in this. After putting aside a fixed amount, the leftover funds are utilized to cover expenses like remittances and balikbayan boxes, among others. Continue reading the following sections to learn more.
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OFW Budget Tips to Grow Your Savings and Secure Your Future
OFWs need to remember that by reducing their expenses, they will have more money to invest and save. This will eventually lead to more passive income.
By investing in multiple income-producing ventures, OFWs can realize that money can make more money. One simple way to do this is by implementing the 30-50-20 strategy – one of the most common and proven OFW Budget tips.
30%: It’s important for OFWs to set aside at least 30% of their income for their future. Having an emergency fund should be around 6 to 12 times their monthly expenses. It’s also important to remember that building an emergency fund is a process that can take a long time. Once they’ve finished building their emergency fund, OFWs can start investing the money they’ve saved in the next paycheque. This is where they can put their money to acquire real estate or for retirement.
50%: One’s money should be set aside for the requirements of one’s family to the tune of 50% of one’s total income. This is non-negotiable, and it implies that one must provide for one’s family in order to retain one’s own well-being as a result of their employment.
20%: Before they begin to spend, they should first ensure that they have saved up enough money to fulfill their immediate requirements as well as to provide for the future. This money can be used to purchase items for the balikbayan box or for their relatives in the Philippines who are currently in the country. This is intended to ensure that OWs are considering their long-term welfare rather than just their immediate needs.
Additional OFW Budget Tips for Managing Your Money
Discipline is a structure that assists people in achieving their goals and reaching their objectives. In all aspects of life, whether it’s starting a business or pursuing higher education, this principle holds true. Individuals are drawn to various endeavors primarily for the purpose of making money.
At the moment, financial discipline is viewed as a waste of time and resources. Because there is always money flowing in, it might be difficult to keep a budget in place. What happens, however, if things turn for the worse?
During this time period, a large number of people turn to banks and other financial organizations for assistance. In the Philippines, this can, unfortunately, lead to a financial catastrophe. As a result, a large number of people are in financial trouble.
The Philippines has a low savings rate, with only one in every four families having savings. This is a concerning statistic, especially given the fact that the majority of people have lost their jobs since the start of the pandemic. It is critical that people begin to plan their financial futures in the years to come.
What exactly is a Budget?
A budget is a financial framework that a business or individual uses to manage its operations. It typically takes months or even a year to establish and implement. The plan should cover various aspects such as expenses, revenue, and time.
One of the most important factors that a person should consider when it comes to establishing a budget is the type of needs that they have and how they should be separated from their wants. For instance, if one has a monthly salary, then it’s important that they have a list of the essentials.
Aside from individuals, a budget is also used by businesses and organizations. A certified financial officer is tasked with ensuring that the funds allocated for the business are used efficiently.
In the Philippines, President Rodrigo Duterte approved the country’s budget for the next fiscal year, which will be around 4.5 trillion pesos. This amount will be used to support the recovery efforts following the country’s COVID-19 recovery.
Why do you need to make a budget?
An effective financial plan is essential for ensuring that all of your expenses are met. All of your non-essential spendings should be included in this strategy as well. You will not spend more money than you have set aside in your budget.
Top OFW Budget Tips to Boost your Savings
Budgeting is one of the most crucial aspects of managing your finances that you should take into consideration. This is due to the fact that it will assist you in establishing a sound financial foundation for your future.
Despite the various initiatives taken by the government to mitigate the consequences of the economic crisis, many Filipinos were nevertheless forced to work longer hours in order to make ends meet. This is why it is critical that they plan forward for the coming year.
1. Developing the Right Attitude
The mind is a powerful tool that can help people develop new hobbies and improve their financial situation. However, it is also important to maintain a consistent mindset when it comes to budgeting.
You need to take time to train yourself on how to budget. Then, start using budgeting apps to help keep track of your spending.
2. Paying yourself first
This culture is one of the reasons why Filipinos need to embrace budgeting. Large groups of people are known to be business owners in the country, which helps boost the country’s economy. However, most of them also put their families first.
One of the biggest mistakes people make is not being smart about their spending. Even though it’s a good gesture, it’s still important to be smart about it.
Paying for yourself first is very important to motivate people to work harder and achieve their goals. It can also prevent them from going on a shopping spree.
3. Developing a budget spreadsheet
With the help of technology, it’s now easier than ever to create a budget. With a simple click of a button, you can easily download a budget template that can be used for both personal and business budgeting.
One of the easiest ways to establish a budget is to evaluate your non-discretionary and discretionary expenditures. This allows you to set a clear budget for the money that you spend each month. On the other hand, discretionary spending refers to the expenditures that are necessary to live comfortably, such as the internet, clothes, and travel.
4. Being realistic
When it comes to receiving student loans or stipends, most people tend to waste the money they receive. Some people say the money was used to buy the latest gadget while others can’t account for it. These are not realistic expenses that should be avoided at all costs.
One of the most important factors that people need to consider when it comes to budgeting is having realistic goals. This is especially important for college students. They are not used to having a huge amount of money in the bank.
5. Keeping track of your expenses
Tracking your spending allows you to create a detailed budget and eliminate waste. There are some things you spend your money on that aren’t worth it in the long run. As a result, make a list of all the invoices and expenses you have each month and examine each one.
This allows you to save money. For example, if you pay for gym classes but do not attend them, exclude them from your budget. As a result, you save money.
6. Using cash rather than credit cards
Credit cards are among the cashless options that Filipinos have used. This is due to the bonuses and points earned after using the card. Though credit cards have many benefits, we encourage utilizing cash to pay for products and services.
We choose cash for budgeting because it allows you to spend only what you need to. If you went to the mall to buy an electric appliance, you would depart with the exact amount.
However, if you have a credit card, you will purchase the electrical appliance and other items. This is owing to the more funds at your disposal. As a result, instead of using credit cards, pay for things with cash.
7. Investments
You can never be wealthy or financially free if you rely just on one source of income. You must broaden your horizons and look for alternative ways to supplement your income. It might be anything from selling things online to purchasing bonds and equities.
Investments do not necessitate a large sum of money. The 40% or 20% you set away for savings can be utilized to establish a business.
8. Understanding money
Before you make any investment or create a budget, you must first comprehend what money is all about. Those considered to be the world’s wealthiest people gained their fortunes through mastering the art of cash.
You can save or earn a lot of money, but if you don’t understand how money works, you’re screwed. Attending classes or reading books is the greatest method to learn about finances. This teaches you how to manage money, make sensible investments, and even create a budget for your business.
9. Digital budgeting
The following are some of the most popular budgeting Google searches: How should you budget your money in college? How do you budget properly? These are just a few of the million questions individuals look up on the internet. Because of digital apps and tools, there are numerous budgeting strategies available.
The tools have been designed to meet your budgeting needs, whether you own a business or not. Mint and YNAB are the most popular programs. Other inexpensive apps are available in the Google Playstore and the Apple Store.
Summary
Aside from being financially responsible, planning for your future is also important for OFWs. Many of them plan on making enough money to return home once they’re finished working in their host countries. With this goal in mind, it’s important to prepare financially for the long term, and one way of doing that is by creating a budget system you can stick with, which hopefully our OFW budget tips can help you prepare.
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