When the exchange rate for USD to PHP goes higher, many hail it as good news for millions of Overseas Filipino Workers (OFWs). After all, their remittances are much higher in monetary value. Yet reality bites: no matter their gains, increasing inflation rate is decreasing the value of their hard-earned remittance.
According to a Reuters study, the growth in remittances among OFWs for the past three years has been 14 percentage points. However, consumer price inflation for the same period is more than 11 percent. With these numbers, one can see how inflation can cancel out whatever increase our modern-day heroes are sending back home. A budget surplus they could have allotted for other expenditures, such as savings and investment.
Though movements in foreign exchange and inflation rates are caused by many outside factors, we DO have control over our spending and other financial habits. Below are six things that OFWs can do to keep up with the rising prices of goods in the country, without necessarily sending more money back home.
1. Get the whole family involved.
Reducing expenses should be a team effort. This means opening up and talking to your family, including your kids, about money. The regular video chats that we do with our loved ones can be a venue to discuss the household’s finances. Allow your children to suggest ways to save money, and think of things that they can do to contribute to the household when it comes to reducing expenses.
2. Set a saving goal with your family.
People are more motivated to save money if they have a specific reason in mind. One way to do this is to set a saving goal that will get everyone excited. Perhaps a family vacation? Home renovation? New appliances? Whatever your choice, make sure everyone is in consensus. So that the whole family can be involved in making that saving goal a reality.
3. Avoid getting unnecessary loans.
It’s often easier to apply for personal loans abroad. This makes it very tempting to resort to borrowing money if only to keep up with rising expenses. However, I advise against going into this type of unnecessary debt. Your access to loans should primarily be for financial emergencies, not wasteful expenses.
4. Choose your friends wisely.
Having friends is important, but it’s essential that we choose the right ones, especially if you’re an OFW. The people we spend most time with have great influence over our mindset. Thus, do your best to avoid those with bad spending habits and a negative mindset. Instead, seek out people with a positive outlook and hopefully a frugal lifestyle. Remind your family to do the same as well.
5. Optimize your free time.
Be productive during your rest days. Use your free time to learn, especially online. You can read and study about business and personal finance in numerous websites, videos, and blogs. Good news is that most of them are free! Who knows, you may have a knack to start a successful online business. I have met several OFWs who were able to come home for good because their online ventures started doing really well.
6. Invest for your future.
Remember that your ultimate goal is to come back home.
Managing the effects and keeping up with inflation is just one obstacle on your path. This means preparing for your future, particularly through investing, should always be among your financial priorities.
Fortunately, there are now a lot of investments that you can do online. More than ever, it has become easier to regularly invest in mutual funds and equities, even if you’re working outside the country.
If you are an OFW interested in learning how Sun Life’s award-winning family of mutual funds can help you come home for good, you can visit www.sunlife.com.ph or drop us a message over social media via @sunlifeph.