How to save money tips for OFWs

Warning: You’re Losing Money by Not Using 6 Laws of Wealth

If you saved all your hard-earned money from very first paycheck until now, you should be a millionaire by now!

Simple sample calculation: You’ve been working now for 10 years with average salary of shall we say Php 50,000 a month as an OFW. So 50,000 x 120 months = 6,000,000. Meaning until now you earned a whooping 6M! Eh di wow! This amount came and slipped out from your hands. If you save it all then you’re a millionaire already. Even on your 20th month you should have 1M already.

But easier said than done. Because we have tons of expenses and obligations. But what if you saved 20% from 6M? You should have 1.2M in your bank account. You’re still a millionaire! And what if this 1.2M was invested? Imagine your 1.2M working for you and earn more money for you. Instead of you, working for that money, it’s your money now who’s doing the hard work for you!

A question to all OFWs: Why there were OFWs who were able to make part of their hard earned money work for them?

I’ve attended the Overseas Filipino Stocks Investors (OFSI) free seminar in August 2015. The seminar eventually changed my financial perspective. The things I learned from the seminar guided me where to invest my savings so that it will earn money for me. In other words, my savings will work for me to earn money.

One story was read to us by our mentor, Mr. Renz Leano during one of the sessions. The story entitled The Richest Man in Babylon. Eager to read the whole story myself, I bought the kindle version of the book. In this post I would like to share to you the “six laws of wealth” mentioned in the story.

First Law: Keep A Part Of All You Earn

You are the one who work hard to earn that paycheck at the end of the month. So you deserved to be paid first before you pay the haris of your building, bakala, and your barber or your manikurista. Ideally, 10 percent of your earnings should be kept aside. This amount will serve as your savings and you may use it in building your ’emergency fund.’ In my next post, I’ll be talking about emergency fund.

I wrote earlier two articles about my personal tips on how to save money. Below are the links for your further reading:

Second Law: Put Your Savings To Work For You

In the second law, this is where investing actually comes in. Savings alone is not enough to retire rich. You need to invest your savings. You know what, basically we all knew the first law. Our parents told us since we were young about savings. But they failed to teach us about investing.

Well, personally, before I invested my savings, I see to it that I have multiple layers of financial buffer. Meaning, I have also set aside money for emergency. So that when emergency arises, I should have something to withdraw immediately. Because when you don’t have emergency fund, where you will go? For sure you will think of your investments. What if your investments have lock up periods? Like mutual funds or UITFs.

So for me, I have two layers of buffer funds before I invests. One is jewelries. In case of emergency, I can pawn anyone of it. Second, I created an emergency fund, which is at least equivalent to my five-month salary. I will withdraw this amount only when there’s really an emergency — not necessarily when there’s a 3-day mega sale.

As I told above, my parents succeed in teaching me how to save. But it was OFSI who taught me how to invest. From them, I learned how to invest in the Philippine stock market, mutual and UITFs. These are the investment instruments we can use to grow our money — not in any ponzi scheme that thrive anywhere because of our ignorance to legit investment instruments.

Well, for me, the cardinal rule of investment is you should study and look for a reputed company or person where you entrust your money to grow. Entrusting your money to a person who’s by trade is a blacksmith to engage in jewelry business then he’s bound to fail. So as your money with him.

Third Law: Avoid Debt

The poor pay interest, while the rich earn interest.

In order to get rich, we should not pay interest. To avoid paying interest, we must by all means avoid debt. But I’m guilty here. Before I know OFSI, I already took a loan from a bank. The loan was good for three years to pay. Now I’m paying interest and principal back to bank. I blamed OFSI for this! Why in 2015 only I knew them? Why not in 2006 — the year I arrived Kuwait? Just kidding OFSI! But anyway, I will be out from this debt soon and by all means avoid debt in the future. Easier said than done, but we have to.

If we plan to do something like a big project, shall we say a house, we should plan it accordingly. We should make a timeline to build it. How much amount we need? How much amount we need to save to reach that amount in that particular year that you are going to build it. Again it’s easier said than done. But there’s of course a way to leverage from certain loans. But in general try to avoid debts.

Fourth Law: Don’t Speculate in get-rich-quick schemes

Granted that you have that 1.2M I’m talking about above. Now you want to invest that money in order to earn more money for you. Where you will go? Sabi nga ni Aya Laraya of Pesos and Sense “aral muna bago invest.” It really make sense. Because most of us became victims of quick rich scams. We are entice to invest because the promised earnings were too good to be true and these scams strategy is to let you earn during the first transaction. Then lured you to invest more money and like a bubble… voila!!! they disappear in thin air! Kawawa ka naman.

Why not attend free seminars like what OFSI offered and learn about investing smartly in the stock market, mutual funds, UITF, etc… and other legit investment vehicles that will drive you to financial freedom. The keyword there is “invest in solid businesses that you understand. Kaya aral muna bago invest ika nga ni Lara Araya.

Fifth Law: Invest in yourself

It’s like a continuation on the above statement from Mr. Araya, but it isn’t about learning about investment alone. It’s about also improving yourself. It could be continuing your college, studying online courses just to add value to yourself to get that long time promotion that your longing for all these years. In this way you will have increase on salary package, which means increase in savings and increase of money intended for investing. In Kuwait, there’s ICSA, an institution that offers bachelors degree courses. If you have the free time and means to study and earn degree… why not? Don’t even think of your age. Kung sa pagibig nga walang edad, sa pag aaral din dapat wala!

Here’s my humble story about investing in yourself: http://retechson.com/2015/11/investing-for-self-improvement.html 

Sixth Law: Safeguard your growing fortune

You’ve done everything to save, invest and as you accumulate wealth start safeguarding it. Meaning try to diversify your investment portfolio to manage risk. All investments involves risks. We can’t avoid that risks, but we can manage that risks to its minimal effect. Not only safeguarding your investment, but you need also to safeguard yourself by having insurance. Because what if you meet and accident or you get sick? If you don’t have the insurance, before you consider borrowing money from anyone, you will think of withdrawing your investment for sure. So safeguard yourself and your investments.

Thanks for reading… happy saving… investing and retire rich!

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