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Migration and financial stability: a model to get there



I Now let’s conclude this series with a mini-research project I conducted on OFWs in Paris, exploring different dimensions – including trying to understand the financial strategies of the poor, dissecting the economic reasons for migration, and finally finding out if and how (if so) the migrants and the families they left behind are actually doing better.

Last week, I presented a model of a migrant’s road to financial stability, which consists of two stages: Achieve independence and Achieve stability. All this rests on two triggering conditions: a debt road to migration and a national preference for investment. I explained that independence depends not only on financial freedom, which comes from higher and more stable incomes, but also on professional freedom (the possibility of changing employer and situation freely), social freedom (repairing relationships that may have suffered as a result of indebtedness), and, finally, psychological freedom (learn to motivate themselves again once they feel safe).

However, all of these achievements remain fragile in stage 1. Whenever a bad situation arises or due to the cultural need to help others in need, migrants not only remain stuck in this stage without the capacity to ‘go ahead and accumulate more wealth, but they often end up going back to where they started. I emphasized to what extent it was accessibility to financial products and financial literacy education that were the catalysts for them to go beyond this level of step 1 and step 2: Achieve stability.

Once they overcome these obstacles, the use of their income changes dramatically. Migrants move from goals based on freedom to goals based on stability and enter a second stage of Migrant Finance, characterized by the elements below.

Financial stability. Migrants began to move from taking action with the goal of breaking free from debt to using the money they accumulated to save and invest to secure their future and that of their loved ones. They would implement budgets with a savings and investment component both in their host and home countries. They would also participate in the paluwagan (a group savings plan with friends) not for debt repayment purposes but rather for long term investment and retirement plans.

Professional stability. The effects of financial stability for migrants go far beyond simply lifting their families out of poverty or providing education for their children, although these are important things. Financial stability has also introduced confidence in their professional life. They no longer needed to take abusive jobs or engage in high risk activities.

“After four years, I managed to build a house. So I started to fight them, my colleague and my employer. I said, ‘if you don’t need me, I’ll go.’ “(Evelyn)

Social stability. Likewise, because they had cut the cord with those on whom they depended financially, they felt accepted again in their social circles. They also began to provide debt themselves to others in need and continued to participate in social savings plans, now with the added goal of helping other people.

Psychological stability. Finally, the migrants were also finally able to achieve psychological stability and the feeling of being happy where they were. To facilitate this, they began to create spending budgets that would instill discipline and a schedule to meet daily needs and future investments. They have participated in banking programs and financial products that facilitate and improve decision making and ensure a better future. They could now also send money used as “maternity money” to feel closer to their loved ones, which helped both parties in the separation situation.

“Yes, the daily chats don’t go away, and then every time I send money, even a small amount – it’s not in the amount – as long as I can make them feel that I take care of them. “(Edouard)

Once the migrant achieved stability, I found that this resulted in two key conditions: social integration in the host country and appreciation of the host country. Although the migrants started with an original prejudice and intended to go back, this period continued to lengthen. Indeed, 60% of the people questioned declared having exceeded their initial deadline, a majority indicating that the reason was that they were satisfied with their life in the host country and did not want to return home yet, against a minority who said they had not returned because they were unable to save enough.

” Yes, I am happy. At first I was disappointed but, by the way, when I managed to put myself in a stable position, that’s when I felt that I was good here, I was already happy, as long as I kept doing the positive things I was doing, sticking to what I should be doing, just being stable. (Jenalyne)

“I have a few words to leave. So for me, success is not measurable by living in a big condominium, a big house, buying a car, buying expensive things. A person’s success is really measured by their financial stability and their availability in case you really need it (…) when there is an emergency, you can really manage. At least you aren’t afraid of what might happen to you. This is where you will see a stable person. (Jenalyne)

Daniela “Danie” Luz Laurel is a business reporter and BusinessWorld Live presenter on One News, formerly Bloomberg TV Philippines. Previously, she was a permanent professor of finance at IÉSEG School of Management in Paris and maintains teaching affiliations with IÉSEG and Ateneo School of Government. She also worked as an investment banker in the Netherlands. Ms. Laurel holds a doctorate. in Management Engineering with concentrations in Finance and Accounting from Politecnico di Milano in Italy and an MBA from Universidad Carlos III in Madrid.


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