Budgeting 101: How to Manage Your Finances as an OFW

1.   Think of your short and long-term goals

Assessing your short- and long-term goals allows you to create a plan for achieving your objectives.

Suppose your OFW contract is only for a couple of years, and you want to establish a business or invest in opportunities upon returning to the Philippines. In that case, knowing how much you need to save on top of your budget and family remittance is crucial. Accomplishing your short-term goals is necessary to fulfill your long-term plans, so you must determine both and ensure they align.

2.   Stick to a budget

One of the most critical aspects of money management, especially for OFWs, is having and sticking to a budget. If you don't know where to start regarding budgeting, financial experts recommend the "50/30/20" method, wherein 50% of funds go to needs, 30% to wants, and 20% to savings.

You can change each category percentage depending on your needs, like subtracting from your leisure activities to allocate to necessities and savings. Whichever way you want to spread your money around ultimately depends on you.

However, sticking to your budget is a must to accomplish all the financial goals you've set for yourself.

3.   Have separate savings account for day-to-day expenses and remittances

Once you've established a budget, track your daily expenses and remittances using different accounts instead of putting the money for them in one place.

Monitoring the funds in each designated expense account lets you stick to your budget and financial priorities. If you find a particular account consistently needing higher allocations, you might need to adjust your budget.

4.   Shop around for the best foreign exchange rates

Before sending money to the Philippines, compare the rates between different money changers. Rates fluctuate unexpectedly, so monitoring the exchange rates is ideal for securing the best foreign exchange rates before remitting money to your family.

You can also maximize your earnings by searching for cash transfer methods with lower fees. Although time-consuming, looking for opportunities to save on service charges, no matter how small they are, can go a long way.

5.   Open a bank account at home

One easy and simple way to budget your money is to open a bank account in the Philippines. If you should let someone else know about the account, choose a trustworthy person to safeguard the funds, which will serve as your emergency fund in case you need it.

6.   Communicate your plan with your family

To better execute your savings and remittance plan, it would be best to communicate this with your family so that everyone will be on the same page and understand why budget cuts are necessary.

So, discuss your family's financial priorities, like school tuition, food, utility payments, house upkeep, and health care. Knowing what aspects to prioritize will make it easier for you and your family to allocate funds to these ends while still saving enough for the future.

7.   Start investing

No one wants to work forever, and investing your money while you have a steady income stream is a way to generate funds for your retirement savings and your family's financial stability.

Apart from putting up a business, you can also try investing in the bond and stock market and hold them for the long term. The stock market is a high-risk, high-reward type of investment. However, if you know and constantly learn its evolving processes, investing in the stock market is an excellent way to make your money work for you.

8.   Avoid using credit cards

When you make a lot of money, it's easy to get tempted, especially if you have a credit card at your disposal. You might think you can quickly pay off your credit card bills, so you use your credit card when you need instant cash for a wide range of purchases. Unfortunately, that practice can lead to credit card debt.

Since a credit card is easily accessible, it can be challenging to monitor how much you've spent unless you actively track each expense. Before long, you may have accumulated debt beyond your paying capabilities.

If you want the cashless convenience that a credit card offers without the fees, you can try using a debit card or an e-wallet to help you with your spending needs.