Francisco J. Colayco

Attitude

I mostly talk about how you can increase your income by setting your financial goals, investing, going into business, and other similar activities.  Let me share a story that reinforces the title of this article.  Your attitude will make the difference!

There is a story from The Simple Truths of Service by Ken Blanchard and Barbara Glanz, famous American authors about a simple cab driver named Harvey.  He doubled his income from the previous year and in the third year even quadrupled it.  He did this by doing the same job that he had been doing for many years.  He just changed his attitude completely after hearing Wayne Dyer on radio saying “ Stop complaining!  Differentiate yourself from your competition. Don’t be a duck. Be an eagle.  Ducks quack and complain. Eagles soar above the crowd.”

Harvey said that he used to be like most cab drivers, a duck always quacking and complaining.  He decided to change his attitude and looked at the other cabs and their drivers.  The cabs were dirty, the drivers were unfriendly and the customers were unhappy.  So he made a few changes at a time and when the customers responded well, he did some more.

Little by little, some of the changes he made were: 1) He kept his cab spotlessly clean.  2) He became extra friendly, greeting his passenger and telling them that he wanted to bring them to his destination in the quickest, safest and cheapest way.  3) He asked them if they wanted to listen to any particular radio station.  4) He even had drinks available for them. 5) He offered them something to read.  6) He asked if they wanted to talk or just to be left with their own thoughts.

After a while, Harvey’s customers called him for appointments and if he is busy, he asks a reliable cab driver friend to pick up the customer for a commission.

It is so easy to immediately say that this story is only possible in America.  But even within America, the author said that he told the story of Harvey to at least 50 cab drivers and yet only 2 of them took the idea and developed themselves.  The others just thought up of all the reasons why they couldn’t improve anything.  This just goes to show that it is not the kind of job or the place.  It is the attitude of the person.

This is the same attitude that is needed by everyone who wants to change his lifestyle and save.  So many write me that they need to earn more money or they want to invest but they don’t have the money.  They want me to tell them step-by-step what to do.  Nobody can do that.  Each person has to stop complaining, find what it is in his life that he can improve on and work on it.

Financial Literacy

Perhaps the issue why there is so much complaining and less action is the lack of financial literacy.  While most everyone is driven by the desire to earn money, how many have a real understanding of how to keep and manage money?” People do not seriously understand why they should save and what they should do.  In informal surveys I have made during talks and seminars, I am amazed at how few have a clear understanding of what wealth means (i.e. when is one wealthy?).  Less than ten percent have an idea of how much money or earning assets they should have by the time they want to or have to stop working.  Very few have clear personal goals at specific future dates.

This lack of goals and plans are in any income class. There are poor people who will do anything to get themselves out of poverty.  Some succeed and some don’t. Sadly, there are poor people who just accept their fate and cannot see how they can get out of it.  On the other hand, there are rich people who are driven to make sure they do not have to downgrade their lifestyle in the future.  There are also rich people who sadly have the mistaken notion that their wealth will always be available forever.  They wake up one day to sadly learn that everything is gone.  These are, to me, the sorriest lot.  They could have shared so much to so many.

There is stage that anyone, rich or poor, can achieve where one is happy because he considers himself wealthy.  One can only reach this balance with the right attitude similar to Harvey’s.

But even with the right attitude, one still needs to have some skills to move in the right direction.  One of these skills is Financial Literacy. In simple terms, Financial Literacy is knowing how to keep what you earn and how to do more with what you keep.

But before anything else, one must understand, know and accept that wealth does not necessarily mean having millions and millions of pesos. What is prosperity for one may not necessarily be wealth for another.  Lifestyle defines this for each person.  The rich and famous need to spend so much more to maintain their lifestyle.  Many envy them because of their seeming “fairy-tale” lives but are they really to be envied?  It is so ironic that so many rich people are deep in debt and would give anything to live a simple life.

In reality, having money, even lots of money, is no assurance that one is automatically wealthy and can therefore afford to stop working for money.  Wealth and money means nothing unless it is matched with time and expenses.

Are you wealthy if you had PhP 1 Million in your pocket?  What about PhP 2 Million, PhP 10 Million or PhP 100 Million?  The answer lies in your expense profile.  If your living expenses are very high because of your lifestyle, or perhaps because you have so much debt, then maybe even if you had PhP 100 Million, you would still be financially short.

So if you had cash and other financial assets that can support your lifestyle for say ten years, would you consider yourself wealthy?

Wealth or kayamanan has to be also based on how much time you have left in this world.  If you are in retirement and have ten years to go, then you are wealthy enough if you had financial assets good to support your lifestyle for ten years.  But if you only have resources good for five years, then you are not wealthy enough.   In this case, you still have to grow your financial assets or lower your lifestyle to match your financial capability.

In effect, people who are happy to live simple lives are the wealthiest of all.  Again, note that it is the attitude and mindset that defines the situation.  In the final analysis, wealth is nothing more than having the money to fund your particular needs at any given time. Being wealthy simply means having sustained financial resources to support your chosen lifestyle even without working. It is a situation where one is ready for emergencies and for the inevitable retirement stage.

With the right attitude and preparation, wealth should be within reach of every income earner.  One only needs to develop the skills.  This is what I try to impart in my books, articles and seminars.  Email info@colaycofoundation.com if you have questions.

You are probably already working abroad.  But you might still welcome a review of all the right things you did and know what you could do to correct mistakes of the past. For readers who have not yet left, this is the chance for you to get ready.

It has been my advocacy to concentrate on teaching financial literacy to income-earning Filipinos.  Fortunately or unfortunately, as an Overseas Filipino Worker (OFW), you are in the majority of Filipinos earning substantial regular income.  I am quite blessed to have been and continue to be able to get to know many of your problems related to financial literacy up close.  It gives me a real sense of accomplishment to be able to assist you in understanding the need to save and to grow your savings so that you may be financially independent when you come back for good to our country.

In the first place, the reasons why you or at least most of OFWs leave their family and go abroad is a combination of the following and not necessarily in order:

1) Lack of appropriate jobs for you locally.  You might have had job opportunities in the Philippines but if you have technical capabilities, you could get a better paying job abroad.  The sense of accomplishment is also a very important part of your life.  If you lose that feeling, it can be very depressing and the nagging thought that you could have done better in life will haunt you till you grow old.

2) Want the experience and adventure abroad.  There is nothing wrong if you are not really there for the sense of accomplishment but for the thrill of being alone abroad and living a different life.  This is true especially if you are still young and single. Hopefully, you can combine work and pleasure.

3) Want for better pay.  I can’t say much more about this.  Everybody wants better pay whether in the country or outside.  I hope you carefully analyzed your net pay.  I hope you don’t fall into the group who thought they were getting higher pay in another country but cost of living and other expenses related to moving away actually gave them a net pay lower than what they would be receiving in the Philippines.

Based on my and the Colayco Foundation for Education (CFE) Team’s personal experience in dealing with OFWs, it seems that at most, only 10-20% would know how to manage and grow their money.  This same ratio probably applies as well to those who stay and work in the Philippines. Personal money management, or applied wealth management is not really taught in schools.  It’s only now that we are seeing our advocacy in promoting financial literacy (personal finance) being brought to schools. A group, which includes CFE is working on an institute to precisely educate teachers who teach finance and economics in investments and personal finance. One of the key and immediate objectives is to reverse the prevailing counter-productive mindset among the earning classes, i.e., the mindset of the “here and now”- the seeming drive to live their chosen lifestyle immediately at any expense up to and including borrowing beyond their means.

Pre-Departure Fundamentals

Before you even leave the country, first and foremost, you should have a personal financial goal.  You should know exactly:

1) How much you are worth today.  You need to make your Personal Statement of Assets and Liabilities and Personal Income & Expense Statements.

2) You should agree with your family left behind what their budget should be and be ready to send only that and no more. Your family should not be tempted to thinking that they can now spend as much as they want just because their OFW is earning in foreign currency.

3) Remember that in making that family budget, you should follow the formula INCOME-SAVINGS= EXPENSES.  It is important that you not only keep some money for your personal expenses abroad but also some savings for yourself

4) You should try your best to follow the 80-20 rule.  You should live within 80% of what you earn and save 20% of your income for your future capital.  If you can’t save 20%  you can start even with 1%.  You just have to get started and feel that winning experience. This will hopefully get you to develop that saving habit.

5) Learn what options you have for saving both here and abroad. You should not just send everything to your family and relatives.  In fact, it is better that you make arrangements for direct placements of your investments with financial institutions before you leave.  In your working country, on the other hand, you should find out the safe methods of keeping your savings.  If you feel confident about investing there over the long term with a reputable financial institution, you could do that.

Your whole end goal should be to come home “for good” with enough saved so that you can sustain a fairly comfortable financial life with your family.  These goals have to be quantified over specific time periods.  You need to monitor your progress and thus should regularly update your personal financial plan.

You might become so homesick and start believing that you have enough saved and that you can easily find a job or business when you come home.  You might start believing that what you have saved will tide you over until you find the job or business.  Unfortunately, many times this might not be a realistic assumption so be very careful

If you still need a job, you should be relatively sure you have that job before coming home for good. If you dream of getting into business, you should prepare for the business that you intend to get into.  You should prepare together with your family in identifying what business you will get into, thoroughly study the identified business and have a complete plan in how to set it up and start operations.  Ideally, the business should already be running even before you give up your job abroad. You can start to prepare for this by working on plans each time you come back for vacation.

One of the better ways to do this is to look into franchise businesses that fit your goal.  In some cases, Franchisors can provide active management of the business in the start-up year.  This way, you or his family member can be taught how to run the business on-the-job. There is no better way to prepare and train than going through this kind of hands-on training.

Typical Back-For-Good Situations

When you are finally home in the Philippines, you could be one of those who say they cannot adjust to the new life.  Most of the time, it is because you realize that what you have saved is not enough.  This is so because it usually is taking you longer to find a job or to think or put up a new business or maybe your lifestyle has just changed.  In this case, your only choice really, is to cut down on expenses drastically until you are able to settle down.

Those who have lived in the Philippines all their lives know that setting up businesses can lead to a lot of frustration especially since the choice of business should be dependent on the passion of the person, interest, size of market and sufficient funding.  To all the OFWs and those who want to be OFWs out there, always remember the saying that “The grass is always greener on the other side.”  Examine your options well whatever side you are in now before making important decisions to uproot yourselves and move overseas or to come back home.

Post Script

With today’s global financial crisis, the challenges are even more pronounced.  Economies of practically every country are melting down.  New investments are not happening and all are trying to conserve whatever cash and assets they have.  Worse, credit is very tight such that even ongoing good businesses are hard put to maintain, much less expand their operations. What is the bottom line of all this? Be practical. Hold on to your jobs for as long as possible.  Don’t rush into starting up new businesses.  The rule of the day is to conserve your assets and avoid risks.