PESO-WISE – Entrepreneur December 2014 Issue

I wish to share with you this article published in the December 2014 issue of Entrepreneur. It talks about how OFWs can teach their children about FQ while they are away from them. It’s a big challenge but it’s a reality that millions of our kababayans are faced with. I, together with another financial literacy advocate, were the resource persons in this article.

PESO-WISE: Four practical ways OFW parents can teach their kids to be wise about money

By Justine C. Tajonera

We often talk about IQ and EQ, and how they contribute to a better and more successful future for every child. Financial intelligence—the knowledge and understanding of money and how it can work for you—is basic for entrepreneurs, but it’s not taught in school from an early age. But it is something that kids can pick up from their parents.

OFW parents face extra challenges. The physical distance of being an OFW makes it even more complicated when trying to teach kids something like financial intelligence. But is possible. Here’s a four-point plan that will pay off for the entire family:

01 Plan

• Parents should agree on family goals and share these goals with their children. “Parents should figure out how much more they will make abroad versus what they can make here. They need to set a timetable for goals and make this transparent to their kids,” says Rose Fres Fausto, a former investment banker who is now the bestselling author of Raising Pinoy Boys and the FQ resource at FQMom.com. Fausto points out that there is a significant (and not easily quantifiable) cost to the phenomenon of OFW families. Financial intelligence starts with knowing and sharing financial goals as a family.

• “Give the family left behind an outline or list of expected expenses and the monthly overhead,” says Rowena Suarez, registered financial planner and chartered wealth manager. “As a family, they need to identify both wants, like gifts, leisure trips, gadgets, or accessories; and needs, like tuition fees, utility bills, mortgage or rent, food, transportation costs.

02 Model 

• “Values are better caught than taught,” Fausto says. “Frugality should not be the exclusive sacrifice of the OFW but should be practiced by their children and relatives back home.” One way to make this an actual practice is for OFW parents to provide their children with financial products that they need to take care of. These products have very low minimum requirements nowadays. “Go easy on the pasalubongs,” Fausto cautions, “model frugality by not giving in to whims and buying expensive wants.” The OFW parent and the parent left behind need to explain to the children than the more frugal they are, the sooner the family can reunite.
• What is a good gauge of frugality? “The family, both the OFW parent and the family left behind, should save at least 10 to 20% of their income,” Suarez recommends. While it’s very tempting to give in and send money for wants, the OFW parent needs to remind the kids that they have a joint plan so that they can be together sooner rather than later.

03 Review

• The OFW and the spouse should regularly review goals and look at the same balance sheet. “Have regular reporting,” Fausto advises, “Review goals as a couple no less than once a year and be firm with the extent of financial support for both the immediate family and extended family.” Suarez adds, “The one left behind should be transparent about all expenses.”

• As a family, they need to be clear about the different kinds of savings. For example, savings for a business, for a home, for medical needs, and for retirement. All of these need to be part of the family plan and all the children should know how they are doing as a family in terms of what they have saved so far.

04 Communicate

• “Giving advice remotely is challenging,” Fausto admits, “You can’t hug or kiss your kids. You can’t reprimand them in real time.” Luckily, OFWs have a lot of tools available that can help them. Fausto recommends regular Skype because both parties can see each other face-to-face. A regular schedule needs to be established so that it’s not taxing for the family. This can be complemented with regular letter writing. Letters allow both the writer and the recipient to reflect on the message. This is especially important if the parent wants to communicate something complex, like financial literacy. It’s also something that the recipients can re-read whenever they want.

• Suarez recommends a time of day when everyone is together for Skype or FaceTime . “Dinner time is a good time to have a family conversation. Everyone is at home. For young children, the face and image of the parent is very important.” This regular communication establishes the OFW parent’s guidance and authority and it also allows the family to discuss important matters like financial goals. From these discussions, they can come up with practical, doable, and measurable next steps.

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About our experts:

Rose Fres Fausto graduated with honors, with a degree in A.B. Economics from the Ateneo de Manila University. She was an investment banker before she became a full-time homemaker. She’s the author of bestselling books entitled Raising Pinoy Boys and The Retelling of The Richest Man in Babylon. She’s also a columnist at PhilStar.com where she writes about Raising Children With High FQ. Her websites are RaisingPinoyBoys.com and FQMom.com where she talks about FQ (Financial Intelligence Quotient), parenting, relationships, Behavioral Economics, womanhood and other matters. You can follow her on FB at FQ Mom, Twitter and Instagram at TheFQMom. Send her an email at [email protected].

Rowena C. Suarez is a Registered Financial Planner and a Chartered Wealth Manager. Her TV show is ‘Investment Academy’ at GNN’s Business Portal aired every Tuesday 6:00 p.m. to 7:00 p.m. Replays on Wednesdays 9 a.m. -10 a.m. Channel 213 on Sky Cable, Channel 8 on Destiny, Channel 1 via Gsat and on free TV in the provinces. For money queries, check her website at www.rowenasuarez.com or e-mail her at [email protected]. You can also follow her on Twitter: @just_askro Facebook page: JustAskRo , Instagram: JustAskRo