Fri. Apr 26th, 2019
Financial Principle

70-30 Financial Principle for the Hard-Earned Money Every OFW Should Know

Why is it difficult for OFWs to save money even after paying their placement fees or right after they settle down abroad? Financial adviser Francisco Colayco shares some great money-saving practices that can help OFWs manage their income while working overseas.

Even after settling their personal debts and able to start working, many OFWs are still unable to save because of lack of discipline and financial goals. Many of them focus on the primary needs of their families with them or back home without considering what can happen along the way. The income of OFWs is not really far behind like those who are working locally whether an average or high-income earner. Mr. Colayco, founder and chairman of Colayco Foundation for Education, released several reading materials about financial and investment planning. According to numerous television and radio appearances of Mr. Colayco, anyone who is serious about saving does not need huge paychecks to start saving.

The 70-30 financial principle is broken down into two parts namely expenditures and savings. 70% of the income is usually spent on day-to-day food expenses, monthly rental bills, utility bills and money remittances in the case of OFWs. These are inevitable expenditures every OFW is facing whether for his personal expenses or remittances back home. Stricter spending discipline must be observed particularly to OFWs who are supporting several family members and relatives in the Philippines.

The remaining 30% is comprised of three components namely savings, investments and charity. OFWs are encouraged to save some parts of their income for long-term investments requiring a down payment or monthly amortization such as life insurance, real estates such as life insurance or real estate. There are also planned expenditures that require savings such as vacation trips or electronic gadgets whether for personal use or family gift. Mr. Colayco noted that OFWs must consider adjusting their preference based on actual take-home pay, therefore, adjusting their rental space, food choices and mode of transportation.

When investing, it is better for OFWs to evaluate their earning capacity to avoid financial woes in the future. For extra income or salary hike, OFWs can put this extra money straight to their savings. They must have early projections of their income for work conditions such as short-term contracts, work displacements, and other labor issues. More importantly, there should always be at least 10% left in the income for donations and charity works.

By following these saving principles, OFWs can cover everything from prevailing expenses to investments without any fund misalignment. All OFW must undertake long-term saving plans in securing not only their family’s welfare but also the time when they retire.

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