Top 7 Reasons Why OFWs Come Home Broke

Many Filpinos leave the country with hopes to find a better future. With that, we have this mindset that by being an overseas Filipino worker (OFW), you earn a lot, send more money for your family and become rich — WHICH IS VERY TRUE!

BUT… For many OFWs, instead of being able to save and invest money, they encounter critical problems which stems from poor money management. Why are there OFWs that work so long and hard abroad and yet they end up coming home broke? On this post, I will share very common OFW money mistakes. To that, I will also share solutions and ideas on how to correct and handle these mistakes.

#1 Many are Financially Illiterate

According to a survey by Standard & Poor, only 25% of Filipino Adults are Financially Literate. Majority of Filipinos never knew the basics of handling money wisely and intelligently like what Fil-Chinese millionaires are doing. Other than the ‘piggy bank’ strategy, we never learned anything about personal finance in school like the importance of saving, thrift values and basic investing.

How to Change It:

Read, learn and ACTIVELY APPLY as much as you can about managing your finances and money properly. Investing a bit money in a book that will teach you how to manage your finances is a good start to become financially literate. (Check Out My SHOP page for some of my book recommendations.) You can also read the tips and advice of some Filipino financial gurus which are often for free. OR You can also register and join the FREE Financial Planning Seminars being offered. By being financially literate, you also become informed on how to identify and avoid quick-rich-money-scams (eg Aman Futures) or questionable investments (eg Globe Asiatique).

#2 Many Incur Debts

…(Sometimes Even Before They Start Working Abroad) It is a sad reality that even before OFWs leave the Philippines or even started getting their first paycheck, they are already have a lot of debt. It is acceptable if it is debt incurred in preparing for overseas work. But, there are cases when OFWs (and their families) feel that they have the power to purchase the things they have wanted for so long. They start borrowing money just to buy stuff that bring instant gratification like furniture, appliances, computers and electronic gadgets with the premise that their soon-to-be-OFW will be earning a lot money and will be able to pay it at some point.

How To Avoid It:

If you have to borrow money, do so because it is necessary and important. Do not borrow to support extravagant spending. Follow and practice this mantra with your family: If you don’t have any money, you should not buy anything. OR You should not buy or spend on things when you don’t have the money.

#3 Many Splurge & Recklessly Spend

Earning in a first-world country increases your purchasing power. With that, more and more of our “kababayans” get overwhelmed easily and start recklessly spending. They begin to have this impulsive urge to display their earnings whether in the form shiny gadgets like smartphones and computers, new cars, house and lot. They lavishly give cash or send balikbayan boxes to their family/relatives filled with imported chocolates, canned goods, apparel, and other items bought by overseas workers during their stay there. When they come home to the Philippines, some OFWs become one-day millionaires. They tend to go overboard and blow their budget on a lot of unnecessary things: nightly parties, weekend getaways, shopping galore, gambling, and so much more.

How To Avoid It:

Just because you can afford something, doesn’t mean you should buy it. Always exercise restraint. Before splurging, make sure you can truly afford it. Don’t spend more because you earn more. Instead, SAVE MORE, when you earn more. Increase the amount you’re saving first, and then you can use the rest for your needs (or wants!).

#4 Many Don’t Save at All

Despite earning more, many OFWs have a strong tendency to spend more rather than to save more. You can say: “I’ve worked hard for my money so I feel justified in splurging and treating myself to better things.” I call this ‘lifestyle inflation.’ Lifestyle inflation simply refers to an increase in spending in response to an increase in income. Whenever a person starts bringing home more money, they start spending more by buying a new gadget, a expensive bag, a nicer car, and so on, they’re undergoing lifestyle inflation.

How to Avoid It:

Take time to plan your expenses and savings. Budget! The first question you should ask yourself is “How much should I save?” NOT “How much should I spend?” Savings should be a top priority. Remember you will have to stop working some time. Are you going to be an OFW forever? Apparently not. You should learn to save and invest for the future. Commit to save a part of your income through your bank. Open a separate savings account just for your savings fund. You can enroll your accounts into an auto-debit arrangement to help force you into saving regularly.

#5 Many Allow Themselves to be ATMs to their Families

Typical OFWs put all their faith to their families back home by sending most of their salary back home and live on what’s left. Since OFWs earn more, some friends and distant relatives won’t hesitate to designate you as the go-to person for emergency or non-emergency cash.

How to Avoid It:

Sending your money back home is okay, as long as you put all the necessary controls and if your family back home knows how to manage money responsibly. Teach your spouse or your family proper money habits. It’s also good to have a funds for special requests – like an emergency fund, special occasions fund or a lending fund. For example, when an emergency arises, such as a medical emergency you can reach into your emergency fund. OR When a family or a friend asks to borrow money, you can use your lending fund. But, remember to lend what you can afford to lose. Don’t feel guilty when you set a limit to what you can offer as help. If you would like to help your family members, give them opportunities to earn such as setting up a sari-sari store or a franchise booth. This way you slowly teach them to be financially independent.

#6 Many Place Their Money on Unproductive Assets

For a typical OFW, investing means buying items that will include any or all of the following: a house and lot, appliances, furniture, computers, electronic gadgets, car, motorcycle and jewelry. While some of these are valuable, many are unproductive assets – meaning they decrease in value over time and they do not provide additional income. In fact, some of these unproductive assets will make you spend more. For example, when you purchase a car, expect to spend on fuel, maintenance and insurance. Buying unproductive items like these is clearly a waste of your money.

How to Avoid It:

Invest in productive assets aka items that appreciate in value over time. Besides highly tangible assets like real estate and a car used for business, invest in assets like mutual funds, investment-linked insurance policies, UITFs and stocks and get your money working for you.

#7 Many Do Not Invest

Many OFWs hesitate when talking about investment. They’d rather put their money in savings in banks, which is a really bad idea. The bank is the worst place to put money, except for emergency needs. The reason: inflation. Your PhP 1000 will buy less a year from now. So the only best alternative for you is to grow your money by investing it.

How to Avoid It:

Start investing, no matter how small. Depending on your investment goals, risk tolerance, and time frame, you can start with pooled funds like mutual funds and UITFs. They are simple (and cheaper) to start with and fairly easy to understand. Later on, when you get a better cash flow, you can get into more complex investments like real estate, which is a great option for Filipinos looking for a passive income. Starting a business can also be feasible provided that you understand the business you’re getting into and know and trust competent people who will run the business in your absence.

Working overseas gives you an amazing opportunity to meet your goals and realize the dreams that you have for yourself and your family. While it is great, it is nevertheless not forever. That’s why it’s important to plan for the future.

I hope you have learned something.

22 thoughts on “Top 7 Reasons Why OFWs Come Home Broke

  1. This information is very helpful since I’m an ofw. Kindly send me emails for some useful articles.

    Many thanks,


  2. Very Important Article for our OFWs to read mas maganda malipat sa wikang Tagalog dahil karamihan ng ating Bayaning OFWs ay pwedeng hindi maintindihan ito. Salamat po.

  3. Fellow OFW’s magsearch lang po tayo sa youtube ng videos to gain financial literacy. I recommend to search ANC-On The Money and watch their videos. I can also recommend reading books pero masyado busy OFW ‘s kaya minsan tamad magbasa but try Rich Dad, Poor Dad if you have the time.

  4. As a retired OFW in the Middle East of 22 years, I can say that moneygirl knows what she is talking about as if she’s been actually an OFW. Dear fellow OFWs, please read and understand what she is saying. By avoiding the financial pitfalls of OFWs, me and my wife were able to comfortably retire at age 55. We are now 58, and are enjoying retirement. To all, be financially secure when it matters, it matters most when you are already old and gray.

  5. Hi! This is a good read! My name is Brian Cruz & I’m a Sun Life financial advisor & SEC-Certified Licensed Investment Solicitor. It will be my pleasure helping those who would want to save and invest for their future. Send me a message: & will do my best to respond the soonest. Thanks!

  6. I’m also an OFW. Since I know that I’m not going last that long as an OFW, I started to invest in stocks, mutual funds, UTIF, some properties and also save as much I can. I do not put most of my money in a bank as a time deposit because it’s interest is very low. Rather, I talked to the banks representatives and inquired about investing through them. I also have 3 different insurances that I am currently paying. It’s not too late to invest your hard-earned money to some fruitful endeavours. And yes, I still provide for the family.

  7. The government must do something about this. Creating the Department of OFW will be the milestone initiative. Koreans have best programs for their OKWs before and after overseas employment and it is better to coordinate with their government on this concern. Our OFWs are deployed at their own with no programs and plans at all.

  8. Finances should always be a family affair. If you are an OFW you need to teach your spouse, your children, your parents, your siblings, your cousins, titos and titas, and your neighbors that money spent is gone while money saved and re-invested grows. At first it will surely be hard because as no.5 says the people I mentioned looks at the OFW family member as the saviour and quick fix so that they wont get “pahiya” when they promised something the OFW’s name. You got to make them understand that just like any other job, working abroad as an OFW is temporary. All the hard work should create something that will in turn generate continous cashflow so that one day you can come home and be present in all the family and barangay gatherings and events that you missed while you were working s an OFW.

  9. Very informative, sana maraming ofw ang makabasa at magsimulang mag save at invest. Sa ngayon ay wala ng dahilan para masabing ‘financial illiterate’ ang ibang ofw dahil sa mga naglipanang mga inpormasyon about financial literacy sa social media.

  10. As an OFW blogger, I would recommend Filipinos working overseas to consistently contribute to SSS, PhilHealth and Pag-IBIG for starters while learning more about personal finance.

    These types of savings are not complicated and a great start to learn on how to save and invest. And also don’t forget to encourage your relatives or family members to do the same.

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