Dealing with Unexpected Events

Topics: Climate, Insurance, Climate change Pages: 6 (1716 words) Published: May 15, 2014
`Unexpected Events: Dealing with Life’s Uncertainties with the help of An Emergency Fund, as well as Insurance’

Chapter Objectives
To identify key risks and uncertainties faced by the overseas Filipino worker that affect their financial status To briefly explain how to use tools such as insurance and setting aside an emergency fund by the end of the session

Detailed Outline (sentences/paragraphs represent sections that will be expounded upon) Introduction
1. Begin with an anecdote of a HK Filipino domestic worker being hit by a compound ‘unexpected event’ (termination, illness in family, natural disaster). In the anecdote, the helper recounts how they she as well as what the impact has been to her financial and overall health.

Input
2. Provide inputs on savings killers, including three specific types of savings killers that can affect us significantly.

Savings Killers

There are many risks (‘patibong’) or uncertainties (‘eksenang di inaasahan’) to our pursuit of our financial goals. These include things such as what you mentioned earlier: Illness and accidents
Death in the family
Termination / contract ending prematurely
Disasters, especially those affecting our livelihood
Increases in the prices of goods
Changes in exchange rate

As these things can get in the way of our efforts to save up for our future, we can even call them ‘savings killers’!

Inflation

Begin with a short anecdote about a FDH experiencing inflation.

Inflation refers to the general rise in the level of prices over time. For example, economists have measured the Philippines’ inflation rate over the past several years and have determined that the general level of prices in the country – on average – rose according the percentages per year in the table below:

If the prices of a particular item, say a piece of small pandesal or a kilo of rice, rose at the exact pace of the inflation rate, their price in pesos would grow from year to year as depicted in the table (e.g. pandesal from PHP 1 in 2000 to PHP 1.40 in 2007, and so on).

Why do prices rise? Many factors affect this. Supply and demand is a central factor. The supply of a particular item in the market might be falling short of the demand for the item - in which case, the price of that item rises. For example, if there is a rice shortage in the country, rice prices rise. An oversupply of rice on the other hand, may result in lower prices.

Explain what does this mean for the FDH? How can one cope with rising prices and increase in value of the peso? How can one use this information to your benefit?

Knowing about the existence of inflation helps us anticipate future rises in prices, so that we can better prepare for the future.

Currency Fluctuations

Begin with a short anecdote about an FDH experiencing currency fluctuations.

[FX (Foreign Exchange) risk – fluctuations or changes in the value of a currency – comprises a key uncertainty for migrant workers who earn in currencies other than the Philippine peso.

There are various factors that contribute to currency fluctuations, includingsupply and demand and government policy. Important thing to note however that the risk can be significant.

[Facilitator asks, does anyone have a good or bad experience with currency fluctuations?Facilitator can then cite an example:

HKD to PHP (Past 2yrs thru Dec 2011)
Highest: 6.1678 PHP on 31 Oct 2009
Average: 5.7269 PHP over this period
Lowest: 4.8242 PHP on 17 Jul 2011]

Since currency fluctuations can result in significant unexpected changes to one’s spending, here are two tips to help deal with them: 1. Set aside a buffer in your monthly budget for currency fluctations 2. Update your spending plans (i.e your budget) regularly and anticipate future price increases

Climate Change

Begin with an FDH recounting an experience of her family being hit by a natural disaster.

Climate refers to the average weather conditions in a...
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