Financial literacy for OFWs

FINANCIALFINANCIALLITERACYLITERACY

Financial Literacy is:Financial Literacy is:

Understanding and knowing Understanding and knowing how you can build your how you can build your personal wealth based on your personal wealth based on your present income.present income.

THE REASONSTHE REASONS

Based on studies, OFWs work abroad due to Based on studies, OFWs work abroad due to some of the following reasons :some of the following reasons :

1. Education of their 1. Education of their ChildrenChildren

2. To build a House2. To build a House

3. To Help the Family3. To Help the Family

4. To earn a BIGGER Income4. To earn a BIGGER Income

OFWs’ REASONSOFWs’ REASONS

7. To Travel and See 7. To Travel and See Other Countries.Other Countries.

5. To Save for the Future5. To Save for the Future

6. Self Development6. Self Development

INCOMEINCOME

Your BankYour BankAccountAccount

Support forSupport forParents, Parents, RelativesRelatives

Your Children’sYour Children’sEducationEducation

HouseholdHouseholdExpensesExpenses

InsuranceInsurancePremiumsPremiums

Where does your Money Where does your Money go?go?

FACING THE REALITIESFACING THE REALITIES

OthersOthers

Pay off debt Pay off debt for the tripfor the trip

3 Typical Budget Scenarios3 Typical Budget Scenarios

Total IncomeTotal Income

Less: Total ExpensesLess: Total Expenses

BalanceBalance

II

$ 3,400.00$ 3,400.00

4,000.004,000.00

----------------------------

($600.00)($600.00)

IIII

$3,400.00$3,400.00

3,400.003,400.00

----------------------------

--

IIIIII

$3,400.00$3,400.00

3,000.003,000.00

----------------------------

$400.00$400.00

DeficitDeficit Surplus / SavingsSurplus / SavingsEvenEven

USUAL EXPENSES / CASH OUTLAYS: Family Expenses (Remittance)

Personal Needs (Clothes, Hygiene & Beauty Products / services, etc.)

Food

Traveling

Phonecards / cellphone

Savings

$1,500

$500

$500

$500

$150

$250

USUAL EXPENSES / CASH OUTLAYS: Family Expenses (Remittance)

Personal Needs (Clothes, Hygiene & Beauty Products / services, etc.)

Food

Traveling

Phonecards / cellphone

Savings

$1,150

$500

$500

$150

$150

$150

Loan$800

NeedsNeeds Things that you must Things that you must

have in order to live and have in order to live and advance in your workadvance in your work

Basic consumption like Basic consumption like food, clothing and shelterfood, clothing and shelter

WantsWants Things that you Things that you

would like to have would like to have but can live withoutbut can live without

Non-basic items like Non-basic items like jewelry, cigarettes, jewelry, cigarettes, alcoholic beveragesalcoholic beverages

Cut-down expenses relating to the things you WANTCut-down expenses relating to the things you WANT Retain expenses relating to the things you NEEDRetain expenses relating to the things you NEED

Pirla Soap Php 9.00

Pirla Soap Php 9.00

Sipgard w/ germ protection

Php 19.00

Sipgard w/ germ protection

Php 19.00

DabDab w/ moisturizer w/ moisturizer

Php 38.00Php 38.00

DabDab w/ moisturizer w/ moisturizer

Php 38.00Php 38.00 Glutathione-L Glutathione-L

Php 43.00Php 43.00

Glutathione-L Glutathione-L Php 43.00Php 43.00

NEED vs. WANTNEED vs. WANT

NEEDS vs. WANTSNEEDS vs. WANTS

Know the differenceKnow the difference

YourYourNEEDSNEEDS

YourYourWANTSWANTS

SAVINGSSAVINGS

Refers to the part of your Refers to the part of your disposable income (take-home disposable income (take-home pay) that is not spent on pay) that is not spent on consumptionconsumption

Be Disciplined!

Income – Expenses = SAVINGS x

Income – SAVINGS = Expenses

PUT SAVINGS FIRST.

Redefining SavingsRedefining Savings

It must be defined It must be defined as an as an EXPENSEEXPENSE. .

It is an expense that It is an expense that BUYSBUYS your yourFUTUREFUTURE..

FINANCIAL STAGESFINANCIAL STAGES

Where does yourWhere does yourMoney come from?Money come from?

CASHFLOW QUADRANTCASHFLOW QUADRANT(Four ways that money may come your way)(Four ways that money may come your way)

Work for yourselfWork for yourself

Work for somebody elseWork for somebody else Go into businessGo into business

Make your money Make your money work for youwork for you

RAT RACERAT RACE

CASHFLOW QUADRANTCASHFLOW QUADRANT(Four ways that money may come your way)(Four ways that money may come your way)

Work for yourselfWork for yourself

Work for somebody elseWork for somebody else Go into businessGo into business

Make your money Make your money work for youwork for you

FAST TRACKFAST TRACK

The CASHFLOW GAMEThe CASHFLOW GAME

INCOME

EXPENSES

ASSETS LIABILITIES

CASHFLOW 1CASHFLOW 1

INCOME

EXPENSES

ASSETS LIABILITIES

Job orJob orProfessionProfession

- Larry Gamboa- Larry GamboaThink Rich, Pinoy!Think Rich, Pinoy!

CASHFLOW 2CASHFLOW 2

INCOME

EXPENSES

ASSETS LIABILITIES

Job orJob orProfessionProfession

- Larry Gamboa- Larry GamboaThink Rich, Pinoy!Think Rich, Pinoy!

CASHFLOW of the RICHCASHFLOW of the RICH

INCOME

EXPENSES

ASSETS LIABILITIES

Job orJob orProfessionProfession

- Larry Gamboa- Larry GamboaThink Rich, Pinoy!Think Rich, Pinoy!

Negative MindsetsNegative Mindsets

““I do not have enough money”I do not have enough money” ““I do not have good enough I do not have good enough

ideas”ideas” Distrust of people – “mandaraya Distrust of people – “mandaraya

silang lahat”silang lahat” Fear of failureFear of failure

In fact, we can be In fact, we can be RICH!!!RICH!!!

We can attain We can attain FINANCIAL FREEDOM!FINANCIAL FREEDOM!

Man Man At WorkAt Work

11Man & Money

At Work

22Money

At Work

33FINANCIAL STAGESFINANCIAL STAGES

Where do you wantWhere do you wantto be in the future?to be in the future?

Where are you now?Where are you now?

PlanPlan11

22SaveSave

InvestInvest33

Three STEPS to achieving Three STEPS to achieving FINANCIAL FREEDOM:FINANCIAL FREEDOM:

PLANPLAN

The FIRST STEP to The FIRST STEP to achieving FINANCIAL achieving FINANCIAL

FREEDOM:FREEDOM:

Steps in Financial PlanningSteps in Financial Planning

a. Set family goals together;a. Set family goals together;b. Set a time frame for achieving family b. Set a time frame for achieving family

goals;goals;c. Discuss and determine how each c. Discuss and determine how each

member will contribute to achieving member will contribute to achieving family goals;family goals;

d. Remind everyone of their commitment d. Remind everyone of their commitment from time to time; and from time to time; and

e. Monitor whether the family is achieving e. Monitor whether the family is achieving its goal or not.its goal or not.

Family goals are usually centered on the Family goals are usually centered on the ff:ff:

a. Educationa. Educationb. Housingb. Housingc. Healthc. Healthd. Retirementd. Retiremente. Protection/preparedness against e. Protection/preparedness against

unforeseen eventsunforeseen eventsf. f. Savings Savings && Investment Investment

Setting-up Family GoalsSetting-up Family Goals

Setting a Time Frame Setting a Time Frame for Each Goalfor Each Goal

Start by answering the following questionsStart by answering the following questions:: Education - When will all the children/siblings finish high Education - When will all the children/siblings finish high

school or college?school or college? Housing – When can you buy your own home or at least Housing – When can you buy your own home or at least

make the down payment for a new home?make the down payment for a new home? Retirement – At what age do you plan to retire?Retirement – At what age do you plan to retire? Health and Protection – Do all the children have the Health and Protection – Do all the children have the

required vaccinations? Do all adults have family health required vaccinations? Do all adults have family health plans?plans?

SAVINGS & INVESTMENT – How much & until when SAVINGS & INVESTMENT – How much & until when should you save? Where and how much to invest?should you save? Where and how much to invest?

LIFE LIFE GOALSGOALSLIFE LIFE

GOALSGOALS

TIMELINETIMELINETIMELINETIMELINE

2 years 10 years

Retirement

Fund (P 1 Mn.)

20 yearsIMMEDIATELY

Graduation Fund for Child 1(P 50 K)

Funds for Business

Undertaking (P 100 K)

Build Dream House

(P 5 Mn.)

• Create a timeline on when you want it to Create a timeline on when you want it to happenhappen• Specify amount neededSpecify amount needed

YOUR FINANCIAL PLANYOUR FINANCIAL PLAN

SAVE!!!SAVE!!!

The SECOND STEP to achieving The SECOND STEP to achieving FINANCIAL FREEDOM:FINANCIAL FREEDOM:

SAVINGSSAVINGS

SavingSaving is a is a conscious and conscious and deliberate way of deliberate way of setting aside a portion setting aside a portion of the personal income.of the personal income.

ProcrastinationProcrastination - delaying savings - delaying savings or putting savings off for another or putting savings off for another time;time;

Poor Spending HabitsPoor Spending Habits – – includes spending on includes spending on unnecessary items; unnecessary items; impulse buying; impulse buying; hedonistic lifestylehedonistic lifestyle

OBSTACLES TO SAVINGSOBSTACLES TO SAVINGS

OBSTACLES TO SAVINGSOBSTACLES TO SAVINGS

Lack of Financial LiteracyLack of Financial Literacy – Spending on liabilities or – Spending on liabilities or items that decrease in value items that decrease in value over time; not knowing how over time; not knowing how your money will grow or work your money will grow or work for youfor you

Culture of Dependency Culture of Dependency -- Being overly dependent on Being overly dependent on othersothers

MAKE YOUR MAKE YOUR MONEY GROWMONEY GROWInvest your savings in Invest your savings in money-making assets. money-making assets. MAKE YOUR MONEY MAKE YOUR MONEY WORK FOR YOU.WORK FOR YOU.

INVESTINVEST

The THIRD STEP to The THIRD STEP to achieving FINANCIAL achieving FINANCIAL

FREEDOM:FREEDOM:

SAVE TO INVESTSAVE TO INVEST

KEEPING MOREKEEPING MOREof the money you of the money you earnearn

MAKING MOREMAKING MOREwith the money you with the money you keepkeep

$MART MONEY MECHANIC$

CASHFLOW of the RICHCASHFLOW of the RICH

INCOME

EXPENSES

ASSETS LIABILITIES

Job orJob orProfessionProfession

- Larry Gamboa- Larry GamboaThink Rich, Pinoy!Think Rich, Pinoy!

INVESTMENTSINVESTMENTS

InvestmentInvestment is is the the commitment of fundscommitment of funds

made in expectation of made in expectation of some some positive rate of positive rate of

returnreturn. .

If the investment is If the investment is properly undertaken, the properly undertaken, the

return will be return will be commensurate with the commensurate with the

risk it assumes.risk it assumes.

WISE INVESTMENTWISE INVESTMENT Think of an affordable project:Think of an affordable project:

Start small but think big

Person to handle (Meron / kaya ba?)

Viability

Preparation – Acquisition / Enhancement of skills

Encourage Family Members in the Philippines to learn the same skills

Eventual Reintegration:Eventual Reintegration:

INVESTING IN YOUR OWN INVESTING IN YOUR OWN BUSINESSBUSINESS Remember that not everyone has what it takes to run a Remember that not everyone has what it takes to run a

successful business;successful business; If you think that you have what it takes to become a If you think that you have what it takes to become a

successful business person, then its time to plan your successful business person, then its time to plan your business;business;

Think about what business you can engage in;Think about what business you can engage in; Look around you and identify business opportunities and Look around you and identify business opportunities and

evaluate each options;evaluate each options; Do a situational analysis; identify the strengths, Do a situational analysis; identify the strengths,

weaknesses, opportunities and threats to your proposed weaknesses, opportunities and threats to your proposed business.business.

BORROWING / LOAN Never treat as source of income

Only when necessary

Dulot ay ka-Loan-kutan kung hindi kailangan- Bulabog ng

collector- Termination YOU’RE

FIRED!