Suze Orman warns OFW families: You can’t count on remittances forever


MANILA, Philippines – Families of overseas Filipino workers must anticipate the day when remittances from their loved ones will stop coming, international personal finance advisor Suze Orman said on Monday in Manila.

Orman, who hosts her own show on CNBC and is a favorite resource person at Oprah, said that families who are dependent on remittances must always think that the money will not flow forever; their loved ones can lose their jobs abroad, get sick, or even die.

“Anything can happen at any time and the problem that is going on out there [abroad]when one person from over there stops sending money in here, you’ve not only affected one person there but also four, five or six people over here. Then that starts the very dangerous possibility of things going wrong,” Orman said in a talk hosted by the Bank of the Philippine Islands.

OFW-dependent families have to understand where that money comes from in order for them to get motivated to fix their household finances, she added.

The Philippine economy is kept afloat by consumer spending that is primarily fueled by OFW remittances. Last year, overseas workers sent $20-billion back home, a record in remittances. According to a survey conducted by Citibank in 2007, however, only one of 10 Filipinos save enough to last their families nine weeks.

Orman said OFW dependents must change their expectation that the funds they receive every month are going to always be there.

“And once we understand it is possible that that check would stop [coming], you would think twice before you go out and buy a flat screen TV or you do things other than saving that money,” the financial advisor said.

No money of their own

Orman shared that members of her household staff are Filipinos, so she is familiar with the habits of OFWs, and the culture of sending their entire paycheck back home and leaving nothing for themselves.

“And we always say ‘Can’t you just save a little money of your own? Can you just keep a little something for yourself?’ It goes on for 10, 15, 20 years,” she said.

Then Orman observed that in the last two years, her staff stopped coming home to the Philippines for their annual month-long vacation every May. When she asked, they said they wanted to save the plane fare money and open a bank account.

“They are afraid they don’t have money themselves and what are they going to do? And their parents can’t take care of them, their parents just died or something happened,” she said.

That sudden change in their thinking was brought about by the realization that they are getting older and they are not feeling as sprite as they did 10 or 20 years ago.

The personal finance guru noted that this phenomenon is not exclusive to the Philippines but it resonates to economies that are dependent on remittances such as African countries.

Change culture of mendicancy

Orman said that it is important to evaluate the realities that are besetting OFWs and their families. They should also think about whether or not perpetuating the culture of mendicancy among the able-bodied members of the extended family is really helping them and the economy.

“Are we helping those people by sending money to them so they never have to dig deep themselves and reach their own potential because the money is coming into them like clockwork when they haven’t made any contingency plan in case that money stops because they don’t think it will ever going to stop? It is possible that we’re hurting them rather than helping them/ Because a lot of times they [dependents]are still very young,” she said.

The personal financial advisor related that some members of her household staff have dependents that are young, employable people. One of them told Orman that her 23-year old brother “just does not want to work” despite being in perfect health.

“But it’s another thing for parents. I believe all children should take care of their parents, I don’t care where they are. I take care of my own mother, she’s going to be 97. It’s an honor to have money to take care of my mama. [But] it’s a whole different light if you’re talking about brother, sister, friends, or things like that,” she said.

Pay debts, save

Once the OFWs and their dependents have evaluated their situation, the next step in achieving financial freedom is to pay off all credit card debts.

After wiping out their high-interest credit card debts, the next step is to start saving for the rainy days before trying to learn to invest in complicated instruments like mutual funds or stocks.

“But nothing feels greater than to have a sum of money in a bank account somewhere. And that what they should be striving for,” Orman said.

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