How to prevent your helper from borrowing

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It is 10 p.m. and the phone rings.  A male voice tells you that your helper owes them money and you better make sure she pays them back.  You reason with him, explaining that you are not in charge of your helpers finances and tell him not to call again. The next night, the phone rings again. You plead and threaten to call the police but the phone calls don't stop.  Night and day the calls come. Finally you feel like you have no choice: you need to fire the helper who serves your family well. It is the only way to make the phone calls stop.  This is every HK employer's worst nightmare. Is there anything you can do to prevent it? 

Understanding Filipino attitudes toward money

Filipinos come from a background of poverty.  They are used to asking each other for money and help to make it through life. They often ask for and give financial aid to each other.  Finding enough money to pay their bills and feed their families is an ongoing struggle.  When we ask them "why do you want to come and work in HK" the most common answer is "to provide for my family" and "for the future of my kids", i.e.,  "I need money for school books, tuition, uniforms, and eventually university tuition." They have hopes of owning a home and/or a small business, but haven't carefully thought through how that might happen.

What can you do to prevent your helper from borrowing?

Many helpers start out in debt because they have to pay high agency fees in order to work in Hong Kong.

The short answer: NOTHING.  You can't control another person, so don't try. The long answer is: there is a lot you can do to try and help your helper learn to manage money well.  Here are a few suggestions:

1. Don't hire a helper from an agency that charges excessive fees to the helpers. When you hire helpers from agencies that charge excessive fees to helpers you are virtually guaranteeing that your helper not only starts out her job "in debt" but will also remain in debt for most of the time she works for you.  If your helper has a HK$10,000 debt when she begins her job, then she has no margin for error. Everything must go well if she is going to pay off this debt and then begin to save for her future. Her income is NOT big enough to handle any adversity + service her debt.  When a family member back home gets ill and needs to go to the doctor,  when the rain ruins their crops, when the typhoon blows the roof off of their house, she will stop servicing the debt and send all her money home to help her family. Her debt will spiral out of control very quickly.  When you go to a Hong Kong Employment agency ask them "Does the Filipino applicant need to pay money to come to HK?" "Does your partner in the Philippines charge her a "placement fee" for finding her a job here?" Most agencies in the Philippines charge the applicants large fees and share part of that fee with their HK partner.  If you hire from such agencies, you are helping create the very problem you want to avoid. 
2. Ask your helper if she has a written budget? If not, send her to Arrow's Tagumpay class. In lesson 4 of our Success class, we show helpers how and ask them to make a written 2 year budget. If she is willing to share it with you, go over her budget with her and praise her for doing this hard work.
3. Help your helper open a HK bank account. The Bank of China and HSBC make it easy for helpers to open savings accounts. If you deposit directly to her account, then she can withdraw only what she needs to remit & spend in HK. The rest can be automatically saved. 
4. Encourage her to have an emergency fund. We suggest that helpers save $1000/mo for 6 months as their "emergency fund". The should keep saving for other goals, but this $6000 is strictly for emergencies (Dr. visits, typhoon damage, etc). Every month when you pay her, tell her you hope she is saving money. 
5. Show her ways to economize. A group of helpers just arrived from Manila and pulled from their luggage sachets of shampoo.  These are very convenient and very expensive. Purchasing large bottles is much more economical, but helpers often can't afford to buy in bulk, so they buy only a few sachets. Helpers could save a lot of money if they learn to buy in bulk.  This goes for any sanitary item or toiletry they might need.

6. Ask her what her "NO" strategy is. We suggest that helpers have a "no" strategy. We teach them to make a promise to a loved one back home that they will never make an important financial decison without their consent and blessing. They will not co-sign, guarantee or borrow money without the consent of their significant other, parent, etc.  This helps them save face with their friend. "I'm sorry Ate, I promised my husband I would not make this kind of decision without his permission. I'll ask him tonight after work." Of course the husband needs to say "No!" enabling the helper to tell her friend "So sorry, but my marriage comes first." 

   7. Help her plan for and think through big financial goals like building a house. Some ladies will borrow money in HK because the interest and terms is much better than in the Philippines. The biggest purchase helpers consider is usually a house. They would normally not consider buying a house until their 2nd or 3rd contract. Is it okay for them to borrow money to buy or build a home?  If you own your home, did you borrow money to buy your house or did you pay cash? If you have a mortgage, why is it wrong for your helper to do so?  If she wants her own house, she will probably borrow money to do so. Rather than trying to forbid her to borrow, you might want to consider helping her borrow "smart": save a down payment, shop for terms, interest rates, sacrifice to pay it off quickly, etc. 

There is no sure fire way to ensure that your helper won't borrow money, but you can help gain financial wisdom and learn about money management. If she learns to be "money smart" then the likelihood of her borrowing money will lessen greatly.