Ismael Lavarias, 53, left the Philippines 23 years ago to work on Saipan for the promise of a better life for his family, but it took a great deal of discipline, patience, and skills for this father of three to reach some level of financial stability.
He said he and his wife are at a point where, if they lose their job on Saipan today, they would be able to go back to the Philippines with enough savings to last them for months until they get another job or until they put up their own business.
“I don't have a vice, and I think people having unchecked vices miss a great deal of opportunity to save at least a small portion of their earnings. For example, I've seen a lot of our fellow OFWs [overseas Filipino workers] spend nights going to night clubs or bars and spend on alcohol and other stuff they don't really need, and end up without much savings or no savings at all,” Lavarias told Saipan Tribune in a weekend interview.
With his job as a heavy mechanic operator earning a bit more than the minimum wage, he was able to buy two parcels of land and build a house in Pampanga, send his children to school, and help other relatives in the Philippines.
His children are now grown up and are now able to help him and his wife. He said he is able to set aside $200 to $300 a month toward his savings.
So how did he do it besides not having to spend on vices such as alcohol and drinks?
“I always try to live within my means. I try to have discipline. If I only have $10, then I will spend less than $10 and at least save a portion of that for emergency or future use,” Lavarias said.
He said he does not buy unnecessary things. He also plants vegetables and fruits in the backyard to supplement their food supply.
“I have okra, papaya, ampalaya, banana, egg plant, sweet potato planted in my backyard. My wife and I seldom buy vegetables because we grow them ourselves,” he said.
He added that during spare time, one can put to good use his talents and skills and get paid extra for it.
“It takes hard work and patience. If you're not doing anything on a weekend, go plant vegetables in your garden, it's a good start,” he said.
Many OFWs who have stayed on Saipan or other foreign countries for years, some of them longer than Lavarias did, have yet to achieve financial stability-that state wherein they have enough funds for both their aspirations such as being able to send their children to school or own their own house and lot, as well as prepare for the unknowns such as accidents and illnesses.
But in many instances, it's not only because OFWs are not prudent or disciplined that they are unable to save.
Here are main reasons why OFWs on Saipan and in any other foreign country have a hard time saving:
It's still true that many OFWs sell or pawn their family's property to pay manpower agencies' placement fees to go abroad. Others resort to borrowing money at high interest rates. They are already in debt even before they leave the Philippines.
Depending on the amount of placement fees required, OFWs spend one, two or more years settling these obligations. Paying off debts, as well as remittances, takes too much of an OFW's earnings that there's just not much or none at all to save for rainy days.
Even OFWs who go on vacation in the Philippines incur new debts, after spending way beyond the dollars they were able to bring home. They think they have the means to repay these debts anyway because they are going back abroad. And the cycle of debt continues.
Uncontrolled expenses back home:
Family members of OFWs have a major role to play in ensuring that an OFW won't come home broke after years of toiling on foreign soil.
Many family members back home no longer delay gratification and buy all the stuff they want-the latest generation of cell phones, a new motorcycle, or expensive clothes-just because their father, mother, brothers, or sisters are abroad.
A sad reality is that many family members do not observe proper budgeting and do not save a portion of what their OFW relative remits to them on a regular basis, so an OFW who unexpectedly lost his job could go home to a family that not only lacks financial discipline but has also become too financially dependent on their OFW relative.
Financial experts say OFWs should know whether their family back home has proven to have managed household expenses well, and go from there. Experts say OFWs should have their own savings account, and not remit everything to their family back home especially if the family has not proven to be good at managing expenses.
High cost of living abroad:
What OFWs need on a daily basis in the country where he or she is working may cost much more. Experts say this could also be a big hindrance to what OFWs can save if they are not careful.
On Saipan, for example, the high cost of electricity, gas, housing rental, food, and almost all consumer products are a concern among OFWs.
Even for OFWs whose families are on Saipan and therefore do not remit regularly to the Philippines except when there are emergencies involving their other relatives, the expenses on island are just “too high” that saving becomes difficult.
Geoffrey Melchor, a 52-year-old project engineer, said his biggest expenses on Saipan are the house rental, Commonwealth Utilities Corp. bills, and his children's school fees.
Melchor, who has been on Saipan since 1987, said while he thinks he earns “well enough,” there's “not much savings” to talk about “because I am also spending dollars here for all of them.”
The father of three said to stretch their dollars, they avoid frequent eating at restaurants and buying non-essential items. He said this type of discipline is needed since he doesn't have other sources of income.
While the adage, “it's not how much you make but how much you save” is true, most of the time, there's just not much to earn in the first place that will make it hard if not impossible to save.
On Saipan, for example, employers have instituted work hour cuts to avoid a shutdown and this means reductions in the salaries of OFWs and other employees. Filipino workers here have reported 64 work hours or less biweekly since their employers' businesses have slowed down. Regular or normal work hours are 80 every two weeks.
OFWs, in prioritizing their expenses given the reduced salaries, tend to place “saving” at the bottom of the list.
Beyond OFWs' control:
There are also instances when OFWs' financial troubles are caused by circumstances beyond their control. For example, their employers do not pay them or they were victimized by illegal recruiters.
Others also lose their job unexpectedly when the business shuts down either for economic reason or the owner decides to retire or move elsewhere. There are also cases wherein OFWs are replaced with local workers in the foreign country where they work.
OFW's own financial discipline:
Experts say since OFWs live away from their families, many of them tend to compensate for lost time by buying things for their family they don't really need. This overspending makes things worse, especially with an already large percentage of remittance, expenses abroad and repayment of debts.
But Carlito J. Marquez, 56, said while he's remitting some 60 percent of his paycheck back home every month, he makes it a point to invest a portion of his earnings to a 401(k) or retirement plan.
Marquez also rarely eats at restaurants and bring cooked food to work for lunch. On occasions, he tries to supplement his income with other projects during his spare time to be able to provide more for his family.
At the end of the day, it's the OFW's own financial discipline that will play the most important role. They will be the ones who can really ensure that their sacrifices-working abroad away from their family-do not go to waste.
Working abroad and earning more than what they would have earned back home brings a feeling of empowerment to many OFWs. They feel they now have the power to buy things that they and their family have wanted for so long-appliances, computers, or a car. Financial experts say while there is nothing wrong with this, OFWs should keep their expenses under control and track where their earnings go.
Experts recommend that people with regular jobs-and that includes OFWs-should set aside 20 percent of their pay for savings. This money can go to emergency payments especially if one has a family. If 20 percent proves to be too difficult, one can start with 10 percent, every payday.
Bangko Sentral ng Pilipinas Gov. Amando Tetangco Jr., at the signing of a memorandum of understanding between BSP and the Commission on Filipinos Overseas in March this year, said beneficiaries of money transfers from aboard should save and “invest” part of their money for a more productive use of remittances.
“While remittances boost economic activity through higher private consumption, the potential of remittances for other productive uses such as savings and investments has yet to be maximized,” Tetangco said.
Citing World Bank records, Tetangco said the Philippines is the fourth largest beneficiary of remittances.
When in doubt, experts say, OFWs should ask themselves whether their family is more financially secure today than they were in the past. If one can answer this positively, then the sacrifice will all be worth it.
OFWs should also have enough savings to invest and start a new life when they go home, financial experts say. Uncontrolled spending back home by the family and the OFW himself while abroad might not have been worth the stint overseas if the OFW ends up with nothing-or even worse-debt in the end.