5 Questions to Answer to Help You Build Your Financial Literacy

Did you know that Filipinos are among the least financial literate countries in the world? This means many Filipinos are not aware of the concept of investment, savings, and even as simple as managing your own money. This explains why most Filipinos don’t have savings account and most of your money go to remittance back home.

As an OFW, you might say, “Wala naman yan” or “Hindi ko naiintindihan ang financial literacy na yan.” 

Don’t worry. Building financial literacy may not happen overnight, but these five questions will help you not just understand financial investments but also promote and encourage you to start building your financial security:

Question No. 1: Do you have savings? 

This is the first question you need to answer when starting to build your financial literacy. Savings is crucial because it not only prepares you for the rainy days but also gives you a chance to bounce back in case of financial difficulty and an edge by the time you reach retirement age.

Saving is a continuous process. Set aside a portion of your monthly income, say $10 or $20 and place it in a fund, preferably a bank account. When you do this consistently, you might be surprised with how much money you were able to save and it will feel good.

Question No. 2: Do you have a financial plan? 

Investopedia defined financial plan as a comprehensive evaluation of one’s current and future financial state using known variables to help predict future asset values, cash flow, and withdrawal plan. To make it simple, what are your short-term and long-term goals.

Your financial plan must lay your specific, realistic, and time-bound goals given the money you are earning. For example, you plan to buy a car below P1 million after five years or at least P100,000 in your Emergency Fund after three years.

Question No. 3: Do you have insurance? 

Not many people believe in insurance, which comes in different types, for three reasons: (a) they don’t know how it works; (b) the premium is too high; (c) they simple don’t trust insurance companies.

Here’s the thing: having an insurance may come in handy during tough times. Invest in life or health and medical insurance because (knock on wood), you’ll never know what could happen if you are abroad.

Question No. 4: Do you have any passive income? 

Passive income is earnings you gained from any enterprise without being materially involved. In other words, you don’t have to work hard for it and yet, you get to earn something from it at the end of the month. Examples of these are the earnings you get from rentals, investment, or limited partnership.

This should be your goal. Apart from your monthly income, look for other ways you can earn and grow your money even without exerting too much effort. Explore your options. Read about investments. Educate yourself as much as you can to boost your learning.

Question No. 5: Do you use loans properly? 

Loans can be helpful, especially during times of need. Unfortunately, there are instances when cash isn’t enough; hence the need to apply for a loan. The question now is how do you use the proceeds of your loan to make it work to your advantage. Consequently, how well do you handle it.

Don’t be among the many Filipinos who borrow money to sustain their lavish lifestyle, only to find themselves buried in debt later on. Borrow only when needed and with an amount that is necessary.

Given these five questions, how many of them did you answer yes? If you have one or two “Yes” answers, then read up, educate yourself, and learn more about the ins and outs of managing your finances.

Can Your Spouse, a Housewife, Apply for a Loan?

In an OFW-Filipino setting, the husband works abroad while the wife stays at home to look after the kids. Apart from that, you, the housewife, are also left with an equally important task: budgeting your husband’s income. 

Apparently, many housewives will say that their husband’s income is “sapat lang” or just enough to last them through the month, or at times, not even enough. Then here comes emergency situations like your child getting sick or payment of school fees. Apparently, your husband can’t immediately send money, thereby forcing you to borrow from other people.

You have several options:

  • Family or friends, common and cheaper since there is no interest charged, although there is no assurance that they will lend you money.
  • Pawnshop, especially if you have valuable items you can pawn, but there will always be a risk of losing them.
  • Loan sharks, otherwise known as 5-6 who charge with higher interest rate.
  • Licensed lenders, which you will learn more about below.

Among these options, borrowing from licensed lenders can be your best bet. It is legitimate, safe, and you are sure that the interest charged is competitive and according to the existing rates.

Here’s the bigger question: Can housewives, whose main source of “income” comes from remittances, apply for a loan?

The answer is yes, and it is called allottee loan. 

All about Allottee Loan 

An allottee loan is a type of unsecured loan that allows qualified individuals to borrow even without collateral. This means the housewife (yes, you) will file the loan application and submit required documents to prove that you are a beneficiary of an OFW.

As soon as you submitted the documents, the lenders may grant (or reject) you a credit according to your capacity to pay. The loan will also be payable within three to six months, or more, depending on your relationship with the lender.

Below are the basic requirements you need to submit when applying for this type of loan:

  • Latest OFW contract with POEA validation
  • Husband’s valid and latest Overseas Employment Certificate (OEC)
  • Valid passport
  • Working visa (for land-based workers) or Seaman’s Book (for seafarers)
  • Allotment certificate bearing your name as an allottee
  • Proof of relationship to the OFW, which in this case, a Marriage Certificate
  • Proof of billing
  • Valid government-issued ID

Some lenders may require you to submit more documents apart from what was enumerated above. Make sure to ask for a list of requirements first so you can prepare the documents before submitting your loan application.

Does Balikbayad offer Allottee Loan? 

Unfortunately, we don’t.

The danger of applying for an allottee loan is that some OFWs were surprised that their spouses applied for a loan without their consent. This could create trouble for their family as it creates both a strain in their relationship and their financial standing. At the same time,  it creates trouble for us, lenders, because we have to demand payment for this type of obligation while understanding your family’s financial capacity.

Nonetheless, we allow existing borrowers to apply for a loan even if the OFW is abroad as long as we are able to get a consent from the OFW himself, allowing such loan.

Tips to Remember when Applying for an Allottee Loan 

  • Think before you submit, the loan application that is.
  • Determine whether there is really a need to borrow or perhaps, you can postpone the expense.
  • Inform your husband about your intent to apply for a loan. This will avoid the element of surprise and possible strain and financial trouble in the family.
  • Prepare the necessary documents. This will make loan processing easier and faster.
  • Make sure to pay on time. This will prevent any negative effect on your credit history.

Single, OFW Parent? These 5 Money Saving Tips Can Help You Even If You’re Abroad

Being a single parent will never be easy. Aside from playing the role of both father and mother, you also have to ensure your kids’ future. Sometimes, you are forced to accept a job offer overseas in order to provide a better life for them. While being a single parent is not easy, being a single OFW parent will never be a walk in the park as well.

Apparently, it’s not enough that you send money back home. Being an OFW is not a guarantee of a good life unless you know how to plan your cards (and opportunities available) well. To make sure you sustain the good life, you can try the following money-saving tips:

1) Start your month (or week) with a budget plan. 

Creating a budget plan can be tricky and tedious, especially if you don’t know where to start. Nonetheless, you need one to be able to track your expenses, make room for adjustments, and ensure that you still have something left to fill up your savings account. Eventually, budgeting could create a cycle of self-discipline and instill the habit of saving.

Don’t know where to start with budgeting? Check out this post and use it as your guide.

2) Open a savings account for your child/ren. 

And make sure it will serve its purpose, which is specifically for your kid/s.

Your kid/s’ future is something you cannot predict. Still, it is best to prepare for it, no matter how good or bad it will turn out. This is why you should open a savings account for your kids as early as possible. All you need is as little as P500 and you are off to a good start. Then, make a commitment to deposit every month, which must also be included in your budget.

The key here is consistency. Instead of shopping for them, save the money because you will never know what will happen. You will surely be motivated to save more once you see that your kid/s’ savings account is increasing.

3) Always pay bills on time. 

Whether it’s a credit card bill, an existing loan, or any utilities expense, it is important that you pay them on time. Otherwise, you might find yourself paying for additional interest and penalty fee, which you can supposedly use on other equally important things, say savings. Worse, past due accounts reflect on your credit data, thereby creating a negative impact on your credit score.

4) Get a side job. 

Who doesn’t want extra money? Being a single mom means you shoulder all of the finances and a side job can be helpful not only to make end meets but also save something extra.

If time permits, consider getting a side job to boost your savings. Know your skills and fix your schedule to find out which sideline is best for you. You can also check this list to help you decide what side job you can take. The money you can earn from your side job may not be that much, but it could help pay the bills.

5) Teach your kid/s to save. 

You can teach your kid/s a lot of things and life lessons, and one of this is the value of saving. Even if you are earning in dollars, this doesn’t mean you should give in to your family’s demands and worry about savings later.

As early as not, instill the importance of saving. Be a perfect example to your kids that happiness is not about the material things you own. Instead of imposing, make sure to explain your financial situation in a manner they will understand so they can help you save. Start with piggy bank, depositing P5 everyday then slowly introduce the concept of bank and savings account.

At the end of the day, what matters is your family’s financial security. Earning your first million may take time, but you will get there as long as you handle your money wisely.