“I’m coming home.”
“Uuwi na ako.”
“Ayoko na mag abroad.”
Whether it be due to homesickness, poor health, or just tired of being away for so long, we all have to come home at some point. One cannot be an OFW forever, unless he/she plans to become an immigrant in another rich country. The question however is, are we ready to come home? Some of us have been here in the UAE, or worked abroad for over five years, some even more than a decade. We all left our home country for the same reasons. To seek greener pastures, to earn more, and be able to save more for our future, and that of our loved ones who are waiting for us back home. But with the current global uncertainties, and economic crashes happening around us we may not have much time left to work abroad. So once again, let me ask you. Are you ready to leave everything behind and come home? I’m not. And for most Filipinos working abroad it’s also the same. Not every one has an Exit Strategy in place, yet. Some, if not most, don’t have a strategy at all! So if you’re one of those who STILL doesn’t have an exit strategy or even thought about it, this is for you.
Most Filipinos who leave the Philippines to find work abroad do not have an exit strategy. Most think they can just simply re-apply for work again if things don’t work out after coming home. Before they left to work abroad, they probably said something like “I’ll only work abroad for 5 years, save and then come home to put up a business and be with my family,” or “I’ll work abroad for a few years, pay off our debts and come home to be with my family,” and some probably said something like this “I’ll work abroad to send my kids to school and come home after they graduate.” They’re very noble aspirations. Borne out of love for family. After all, who doesn’t want a better life for their loved ones, right? But there’s just one problem. It does not address the question of “what happens after I come home?” There is no Exit Strategy. A lot of Filipinos who worked abroad for several years, or decades usually end up being dependents of their children, or relatives. Why? Because they did not prepare for it. Some did not prepare for it out of ignorance, some were just irresponsible.
What is an Exit Strategy?
For Overseas Filipinos, this is a strategy, or a plan that we need to draft, and execute to ensure that when we stop working abroad, we will still be able to live comfortably even without the huge salary that we used to receive when we were still working abroad.
This strategy however, takes a lot of preparation. It takes time to build a very good exit strategy. This is why in every investment seminar the speakers always talk about one important key resource that we need to value and use properly. That resource is TIME!
A wise man thinks ahead; a fool doesn’t, and even brags about it!
Now as an Overseas Filipino, we need to understand, and realize one thing. Our time as an employee in a foreign country is LIMITED. Our bodies will eventually age, and at some point we will all get tired of having to wake up and deal with the daily commute or drive to and from our place of work. It is for this reason that in order for us to be able to one day, pack up and go home for good, we need to use our Time and Money here wisely. You don’t need to have a post-graduate degree in Finance or Business in order for you to come up with a good Exit Strategy. All you need is TIME, Discipline and of course, Money. All three needs to be present in order for your strategy to work. The earlier you get started on your Exit Strategy, the better off you will be when the time comes.
What does TIME have to do with my Exit Strategy?
Simple! The more Time you have, the better off you will be when the time comes for you to retire and go home to the Philippines. Let’s take a look at the examples below.
OFW 1: 30 years old, and has PHP 1M in the bank.
OFW 2: 50 years old, and has PHP 1M in the bank.
Both OFWs wish to retire at age 60. Both of them invested their 1M in an instrument that earns 6% p.a
OFW 1: PHP 1M, invested for 30 years at 6% p.a will retire will PHP 5.7M.
OFW 2: PHP 1M, invested for 10 years at 6% p.a will retire with PHP 1.79M.
Wait, what? How did that happen?
Ever heard of Compound Interest? No? Compound interest (or compounding interest), as defined in Investopedia is interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan. In short, it is interest upon interest.
Since OFW 1 had more TIME to let his investment grow through Compounding, he was able to retire with a bigger retirement fund that OFW 2 who had only 10 years left before retiring.
How can I prepare for my Exit?
- Have a goal in mind. What kind of lifestyle do you want after working abroad for years? Where will you live? Do you plan to just retire or would you like to set-up a business? Visualize. The clearer your goal is, the easier it will be to plan for it.
- Assess your current situation versus your goal. Now that you have a goal in mind, check your current status. Are you close to achieving your goal or is there a huge gap? If you’re not too far behind, good for you. You’re probably one of the few who managed and learned to take control of your finances. If you’re not even close, or just getting started then you need to start thinking about what you need to do in order for you to achieve your goal. Build a strong financial foundation. You can read more about it in my previous blog.
- Save and Invest! The best way to achieve your financial goals, and execute your Exit Strategy is by Saving and Investing your hard-earned money. Keep in mind that every time you spend, it’s not just money that you’re using to pay for that expensive meal, trip or gadget. It’s TIME! Say for example you’re earning around AED 7000 a month, which means you’re getting paid AED 40/hour. Before buying the latest pair of Jordans, think. Is that shoe really worth 10-14 hours of work? Or how about the latest smartphone? Is the latest IPhone 8 (approx $1000) really worth 92.5 hours of work? Keep in mind that these luxury items DO NOT increase in value over time. In fact, the latest phone today will be worth ZERO after 5 years. Now if you invest that money in an instrument that earns at least 6% p.a for 10 years, your money’s value will be $1790.85. Almost double! So each time you get your salary, make sure to set aside part of your income. Save it, and Invest it for your future.
In the house of the wise are stores of choice food and oil, but a foolish man devours all he has.
Planning for the future and executing your Exit plan and strategy takes a lot of work, but it’s something that every Overseas Filipino needs to do in order to ensure that they will not become a burden to their family after coming home for good. It takes a lot of discipline, effort, and will-power. If you have already saved a lot of money, but it’s still short of your goal, don’t be discouraged. It’s better to have a big goal and miss it, than to aim small and achieve it. If you aimed for PHP 10M, and only achieved PHP 4M, you’re still way better off than the guy who only aimed for PHP 1M and hit it. If you’re already in your advanced years, and do not have much time left to achieve your goal, do not let that deter you. What’s important is that you start doing something about it. It’s still better to have set aside something than to have nothing at all once you go back home, for good. All you need to do is to start working on your Exit Plan- NOW, and stick to it. Do not lose sight of the end goal.