Question: I’m an OFW in Singapore, 24 years old and starting to be serious aboutmyfinances. I have started to save already but sometimes I feel like a ‘bank’ needing to send money home most of the time. I am now torn between helping my family and preparing for my future. I already built my emergency fund, what’s next for me? – M.B. Pangilinan, via e-mail

Answer:

Firstly let me get this off my chest and say “mabuhay ka M.B. Pangilinan!” Being an Overseas Filipino Worker is hard and difficult and yet you endure all of it. In my eyes, you guys are truly modern day heroes and I’m not just riding the band wagon, I mean that from the heart.

Let’s see how we can sort out your sticky situation. Firstly, it is very noble of you to help your family despite your young age. Our society is a unique one when it comes to giving family support, we have burdened our children into providing for us, and yet it is also very noble of us that we do not abandon kin that needs our help. I don’t know you personally nor do I claim I understand your family’s situation. What I can say is to look for some sort of balance, a middle ground of some sorts. While we can argue that it is not your obligation to provide for the other members of your family, I don’t think that ignoring their plea for help with let you sleep well at night also. I suggest you have a nice talk with the folks, respectfully telling them about your willingness to help but respectfully telling them of your situation, goals and aspirations. Look at your cash flow, how much money can you send home and still have enough left for you to prepare for the future and start investing? Only you can discern that percentage of your income that you can send home. By continuing to send big amounts of money home, not much will be left for you to prepare your future with; and I believe that too much dependence on your income will prevent other members of your family into being productive. An honest to goodness talk with the folks, done in a very respectful and loving manner will keep the harmony in your relationship with your family.

Moving on to your next concern, what’s next for you after you have established your emergency funds? That’s the fun part brother – you can now slowly build your portfolio and make your money work for you. Every dollar you set aside and invest is a step closer to achieving your dreams. Start by identifying your goals, what is it that you really want? Do you see yourself retiring earlier than customary retirement ages, say 50? Do you envision coming home in a few years to settle down and put up your dream business? Knowing your goals is the first step into investing. Your financial objectives should determine every action you will take in finance. What is your risk tolerance? Would you consider investing aggressively or do you see yourself as a conservative player? In investing, yields are determined by the risks you take – the higher the potential yields are, the higher the risks and vice-versa.

It would be good to allocate a regular amount, part for savings and part for investing. A good suggestion for you is to look at pooled funds. If you plan on investing in Singapore, there are a plethora of choices there, just be careful that you investigate the funds you are investing into. Many of them are termed to be ‘exotic funds’ and might not be consistent with your objectives and risk preferences. Should you decide to invest in the Philippines (and I pray you do), you can also look at the pooled funds here being offered by way of local mutual funds or Unit Investment Trust Funds (UITF) being offered by the bigger banks. They are investment funds professionally managed and you can opt for conservative, moderate or aggressive risk. Pooled funds are good starter investors especially for young OFWs like yourself since it allows you to invest in small amounts and you will have access to professional investment management. While you are still trying to discern the path you will be taking, it is prudent that you start planning and execute those plans. “The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.” – Proverbs 21:5, ESV

Just in case you will be home for the holidays, why don’t you send me a message so we can sit down and discuss further or better yet, join us for the Happy OFW Christmas, a blow out gathering for OFWs on December 16, 2011 from 1 to 6 pm at the Philamlife Auditorium, U.N. Avenue, Manila. This is a project with the Blas F. Ople Policy Center, an advocacy I truly am part of.