Why OFWs Aren’t Spending On Long-Term Investments
Billions of dollars are remitted by Overseas Filipino Workers every year. Data retrieved from the Central Bank of the Philippines has the total remittances by OFWs from January to October of 2016 at $24 billion. This is a 5.2% increase from the same period of the previous year. Looking at the data from all the years prior, the trend seems to indicate that OFWs will be remitting greater and greater amounts as time goes by.
Where do all these remittances go?
Education, Healthcare, Savings, and Debts
A quick look at the Central Bank’s Consumer Expectation Survey for the 4th quarter of 2016 sheds some light. Aside from food and other household needs, many remittances are used to pay for tuition fees with 70% of OFW households saying they allot a portion of their remittances on education. The next most common expenditure are medical expenses at 55.2%, after that are savings deposits at 46.8%, then debt payments at 42.8%.
“In the long run, it’s not just how much money you make that will determine your future prosperity. It’s how much of that money you put to work by saving it and investing it.”
Peter Lynch, Fidelity Management & Research Co.,
Only A Small Portion Of OFW Households Spend On Real Estate And Other Investments
Interestingly enough, not many OFWs allocate their resources to expenses that provide long-term security. Cases in point, only 13% spend on real estate payments and a mere 10% invest their money elsewhere. However, it’s understandable why only a small portion of OFW households spend on items with recurring payments.
Making Recurring Payments Is An Arduous Chore For The Overseas Filpino Worker
The most common way OFWs go about paying for recurring fees such as mortgage and car payments, investments, and other bills is by:
- Assigning a trusted 3rd party to
- receive the remittance,
- go to the payments center,
- fulfill the payment.
There are many things that could go wrong between point A and point B which can be the cause of many headaches and added stress on the already-busy overseas Filipino worker. Hence, many OFWs are discouraged from getting into this situation in the first place and are left with limited control of where they spend their money.
The Great Need To Connect The Payer to The Payee
Overseas Filipinos have a hard time paying for their bills at home. On the other side of the coin, companies have a difficult time receiving international payments from their customers. Today’s technology should render problems like these obsolete. OFWs should be able to pay their bills from wherever they are in the world with only a few simple clicks.
Solving this problem empowers the overseas Filipino and restores his ability to make good financial decisions.
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