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Do you have a million pesos banked
I have read a number of articles about how much money is needed per month to live in the Philippines. I have promised myself that I would not write an article about how much money a foreigner needs per month to live in the Philippines until I have actually done it. This article brings up a topic that I have not seen addressed, which I feel is even more important than how much money per month is needed to live in the Philippines.
An emergency fund is important, in my opinion, regardless of where you reside, but I cannot imagine moving to a foreign country like the Philippines where there is very little government support for hard luck cases without substantial cash reserves. I am not blaming the Philippine government for the lack of a safety net. The Philippines is a poor country. The needs of the poor citizens are greater than the government’s ability to help, so it goes to figure that the Philippines has even less for foreigners who have entered the country without proper planning.
My thoughts on how much of an emergency fund is needed in the Philippines is at least 1 million pesos, about $20,000 or 12 times your monthly expenses whichever is greater. My admitted inexperienced advice to anyone who does not have at least this amount of cash on hand is to stay where you are until you do. If the money in the Emergency Fund drops to say 500,000 pesos, I think it is time to exit the country before the situation gets untenable. This is my opinion and if you think I am wrong to do what you think is best for you, but in life, things go sideways.
What could possibly go sideways in the Philippines? A couple of things that come to mind are medical problems and legal problems.
Is a nest egg important when living in the Philippines
Medical Expenses
Medical problems are inevitable. At some point everyone has medical problems until they die, then no more medical problems. In the Philippines, if a foreigner has Filipino relatives which most do since most have a Filipino spouse, then the medical problems of the family can also become the foreigner’s financial problem. Things can happen like your wife’s mother getting a disease or a family member falling: off the top of a jeepney, from a scooter while not wearing a helmet, or from a coconut tree while climbing to get coconuts. The possibilities are endless and medical problems should not be a surprise, so an emergency fund is of crucial importance.
Jeepney surfing could lead to medical expenses
Legal Expenses
I do not think legal problems are as inevitable as medical problems and I believe prudent steps can be made to avoid them, but I do think they are possible and having an emergency fund to be prepared for them is a really good idea. Possible situations include an accident where you are blamed rightly or wrongly, a claim of paternity, the need for an annulment of a significant other, property disputes, problems with immigration, property disputes, etc.
If you think I am not the best-qualified person to write this article, then I 100% agree with you. Many readers of this site are more qualified than me. The owner/editor is way more qualified to write about this, so I am counting on you, the more qualified reader to correct me if I am wrong in the comment section.
Chew the FAT?
Chances are if you are reading this article you have read previous articles that I have written and had published on this site. This site is an expat site and I am not an expat. I am married to a lady from the Philippines and I have visited our Filipino family on several occasions, but again I am not an expat and I am now suspecting I never will move to the Philippines. In part, I started writing articles to see if I could write in a way others would find interesting. I also wanted to learn about expats. I feel I have been successful at both goals. I have tried to write articles that were: entertaining, provoked responses from readers, helped me learn from the feedback of commenters, and I felt I knew at least a little about what I was writing.
I have been considering starting my own blog site. My site would deal with relationships between Americans and Filipinos and with Filipino culture as I have experienced it through: my marriage, my interaction with my Filipino family, and my visits to the Philippines. I was going to call my site Fil-Am Talk or FAT for short. I recently decided that I do not currently have the available time to commit to a blog site of my own and run a site that would be up to my standards. I am not sure if I will continue to write online articles in the future. I welcome comments and the feedback from readers. Three things I would like to get feedback on are as follows: my thoughts on an Emergency Fund in the Philippines, how much interest readers would have in my FAT site if my time situation changes in the future, and the quality of my writing.
Gotta love how you promote your articles, Jay, as if you are selling oldies but goodies tapes on TV for the Maryland Public Television (MPT). I do want to make a comment about your use of the word,”never”, in this and previous comments about not retiring to the Philippines. No offense intended, but as they say, “never say never’. For one thing, your bio states you are “hoping/planning to retire to Bohol in about 10 years”. Whatever the reason for your change of heart, you could still change your mind, so never say never. 🙂 The emergency funds you speak… Read more »
Hi John, Thanks for the comment! Much like Rob, I was thinking I might put up a big doughnut on the comment count. I think we both overestimated the interest in our topic. I am certainly not offended and I was probably overstating the odds against ever relocating to the Philippines to make the point that this was not an article I felt was best written by me. On having an emergency fund, I saw a comment from a Filipina recently where she was asking if her foreign husband could get a visa to the Philippines, because he had less… Read more »
Jay, why would one be obliged to cover ones wife’s relatives medical expenses? I have been happily married residing in the Philippines for 20 years and not once have any of my wife’s relatives asked for financial help. Do you want to know why? Simply because when we married many years ago my wife and I set the rules informing her relatives not to bother asking for any financial handouts. I have seen so many weak characters (foreigners) cleaned out financially..Many so called Mr nice guys can easily be taken advantage of and I can assure you it happens all… Read more »
Hi Mike,
With your 20 years of experience living in the Philippines, you would have been a better person to write this article than I. We feel obligated to help with my wife’s 79 year old mother’s medical expenses just like my wife’s siblings. Some of the other members of the family we help to a much lesser degree. Thanks for your comment!
Peace
Jay
Hello Jay, I’m with John on the never say never part. I have an emergency account. It’s separate from my savings account in the bank. It’s not a million pesos, but it can help out in a medical emergency. I have tricare insurance and Philhealth, and as long as my ticker is still ticking, my pension and social security will keep flowing. I wouldn’t tap that for a relatives medical emergency. That would have to come from our normal operating funds and be budgeted accordingly. For blogging advice, I’d recommend buying Bob Martin’s book on the subject. I think Dave… Read more »
Hi Pete, Thanks for your input and comment! I probably could have been clearer about the emergency fund. I am not saying that it would have to be specifically in pesos in a Philippine bank, though having funds in a Filipino bank would make sense if that is where you live. I just meant money that could be accessed fairly quickly. A million pesos just sounds cooler to me than $20, 000. I think I will kind of continue writing and submitting articles for LiP at about the same rate. I enjoy doing so and it keeps my name out… Read more »
I agree that an individual should try to keep an emergency fund. However I would suggest the money be kept back in your home country and use a debit or credit card for immediate access. For me that is the USA where inflation has been lower and the exchange rate has risen over the past several years. Having the money in a peso account would have resulted in 20 – 30 percent decline in the dollar value had it been parked in a Philippine bank. Also if you choose to keep a million in a peso account you should split… Read more »
Hi Mike, Thanks for adding so much to my article with your comments! You are correct about inflation and the weak peso. You are also correct about the 500,000 peso insurance limit. How do you get around the 250 peso service charge for using the ATM. We were on vacation and my wife got 1,000 pesos from the ATM machine and paid 25% of that 250 pesos in a fee. When I found out I told her to always get 10,000 pesos and the fee will only be 2.5%. I have heard Paul Thompson and other expats say they write… Read more »
Jay,
HSBC does not have the P250 charge, and you can also get up to 40k at a time from the ATM. As far as I know, HSBC is the only bank that does not charge that fee.
Hi Bob,
I think we have had this conversation before. They do not have ATM’s in Bohol or many other places. Is that correct?
Peace
Jay
I am aware that they have no ATM machines in Bohol. But many people read these articles and comments, it is good to provide the information for those who do live in cities where they have branches.
Hi Bob,
I am sorry my response was a bit rude. I actually did not intend it to be rude, but it was. Thanks for your comment! I agree the information may be helpful to others!
Peace
Jay
Rude? I never thought your comment was rude. What made you think that?
Hi Bob,
I don’t know. I have had a long day. I am signing out from the City of Oaks before I type something stupid….to late.
Peace
Jay
LoL, have a good evening.
There is downtown town in Bohol have ATM. very few ATM available in the Bohol
Hi Ahmed,
In Tagbilaran there are many ATM’s. In other parts of the island probably not so much, but most bank branches should have ATM’s.
Peace
Jay
Yes we do that except I write the check for an estimated three month’s expenses. It takes about 30 days for the check to clear and be posted here in the Philippines. The dollars are then converted to peso until such time as the dollar account needs to be replenished. I do draw peso against my debit card about once a month just to make sure I have established a “pattern” of usage with the bank and to make sure it continues to be active.
Hi Mike,
Thanks again for your helpful input!
Peace
Jay
Jay, Since you are in the U.S. look into opening a Schwab account. You have to open a brokerage account ($1,000 minimum deposit but no minimum balance after the initial deposit) and you get a separate checking account with that. You get a Visa debit card. They reimburse any ATM fees you are charged any where in the world. (However, don’t use BDO ATMs because for some reason the ATM fee that is charged does not show up as a separate ATM fee at Schwab.) https://www.schwab.com/resource-center/insights/content/5-ways-to-save-money-when-traveling-abroad A cost-conscious travel companion A Schwab Bank High Yield Investor Checking® account comes with… Read more »
You guys know that you not only pay P250 atm fee, but also pay for some currency conversion loss right? You don’t really get the actual usd to php rate, but a tad lower. Look into third party wire transfer services. There is one that has no conversion loss and asks only for a small transfer fee. It takes at most a day to transfer though, but it’s reliable, secure and operating in most countries. It’s the one I use. I won’t name it lest I’d sound like a spammer. 🙂
Hi Equalizer,
You are correct on what you say. When we send money to our family in the Philippines they always give a little less than the going exchange rate. I think for expats the best solution is to write themselves a paper check from a bank outside the Philippines every month for expenses and deposit in a Filipino bank. Thanks for the information!
Peace
Jay
Jay, Enjoyed reading your post. We generally write a monthly check and usually takes 25 days to clear, though it only takes a few days to clear my US Bank. We have a pretty good amount for emergency situations. I don’t like to go below a certain amount. We try to save some money out of my monthly pension to keep it at the same level. We also have a decent amount of peso’s in our BPI and Security Bank Accounts. Before I moved here I worked hard and made sure I had plenty of money set aside. What surprises… Read more »
Hi Randy,
Thanks for commenting and sharing! I think we are in agreement on the importance of an emergency fund. I too am surprised that foreigners would come to the Philippines and live month to month. It is only a matter of time before their luck will run out.
Peace
Jay
Jay: I agree with you, 1 million is a good number, mostly for medical emergencies for a guy who has no insurance except Phil Health. I’m not quite there yet, but I’m working on it. -Rob
Hi Rob,
Thanks for commenting and good luck getting up to 1 million! I think the 1 million is even more important for people just starting or in the planning stage for moving to the Philippines. No matter how many article you read saying how much it will cost per month to live in the Philippines you really will not know until you go and do it for a year or so.
Peace
Jay
Thanks for the interesting article and your perspective on finances. I would think it probably boils down to personal circumstances as to how much you need in emergency funds. My partner has an account that I contribute to periodically for living expenses, then I pay for big ticket items from my savings, such as my trips back to the UK to visit family. My savings are all UK based as I can’t make anything like as much interest if I deposit large sums here. In the event of a major problem such as a medical emergency (God forbid), I have… Read more »
Hi Peter, Thanks for commenting and sharing! It sounds like you are well prepared for situations you and your partner might face. Our situations are different since I only visit for about a month, but I use credit cards for any fairly large purchase at a mall, department store or modern-type grocery store. The other purchases I use cash mostly obtained from ATM machines. I do bring a small number 3-5 of $100 bills, but tends to keep 1 or 2 just in case something weird happens with my credit cards like they freeze them, because I am using them… Read more »
Hi again Jay
I know what you mean about credit cards being frozen when you travel. Some time ago I notified my credit card company that I live in the Philippines, even though my billing address remains in the UK. Since then I’ve never had any problem. (I don’t use my Philippines address for billing as this can cause issues with online shopping!).
Take care,
Peter
Hi Peter, I always tell the bank when I go to the Philippines and when I am coming back. I had no trouble my last visit, but I have had the ATM card frozen a couple of times. I feel safe in Bohol when I visit, but I try to not carry too much cash and not show what I got. Actually I strangely had an online shopping issue myself on the last visit. We had a clothes washer delivered and installed in our US home a few days before we left for a month long trip to the Philippines.… Read more »
i check this site every day i think it is must reading for anyone planning on relocating there,especially the way to handle money.i have visited Davao 3 times in past 5 years.when i returned home after my first visit I found a lady from Cebu and studied the language day and night for about a year and a half ,not because i wanted to communicate I wanted to know what they were saying about me.On my next visit, for a few days i kept my mouth shut and listened.I felt so bad almost guilty i heard nothing but good and… Read more »
Hi Bill,
Thanks for commenting! My dad had similar misgivings about my wife’s friends when he attended gathering here in the USA. The Filipina’s would speak in their language and it bothered him because they can all speak English. He thought maybe they are talking about me. I personally don’t worry about it, but I get how it bothers others. Congratulations on learning a new language!
Peace
Jay