When your helper borrows money
At least once or twice a month a customer will call me to ask me for advice on how to handle a helper who has borrowed money. Many employers warn their helpers about borrowing and even tell them that borrowing money is grounds for dismissal, but helpers still borrow money. Why? What is happening? What can you do about it?
Why do helpers borrow money?
Helpers borrow money for many reasons, but the most common ones are:
to buy a house:
to pay critical medical bills for a loved one: Healthcare in the Philippines is not free, and unless you pay first, hospitals will often refuse treatment. If the helper’s choice is between obeying her employer re borrowing OR saving the life of a loved one - well, you know what they will choose.
to pay tuition for their children’s education
to start up a business or invest in a business they already have
to meet critical bill deadlines. Sometimes they have bills due on the 1st of the month, but their employer doesn’t pay them until the 3rd. If they are late paying - they incur fees and interest charges. Most of the time when this happens they will ask their employer for an advance on their salary.
What is happening?
Helper’s basic salary is only $4870 per month. Almost all of this goes for their family’s basic needs: utilities, food, school uniforms & supplies, rent or house payment. They do not have any extra in case of emergencies. AND emergencies always happen. It’s called LIFE. Storms destroy crops, parents become ill, appliances break, etc. When that happens they don’t have any way to take care of those emergencies except to borrow money. In addition they have never learned about money or how to manage it. They lack basic financial education.
What can you do about it?
Threatening to fire helpers IF they borrow money does NOT work. If the need is great enough they will borrow, even if they have promised to “never borrow money”. Threats will only insure that they do not talk to you about their financial problems. If you’d prefer to never hear about their financial woes, threatening to fire them if they borrow - will guarantee that you won’t hear about it UNTIL they miss a payment. What options are there?
Talk to them about their goals. If they don’t mind sharing, ask them what their financial goals are. Why are they here working in HK and not with their families in the Philippines.
Share with them your concerns about borrowing and explain to them what happens in HK when someone misses a payment.
Help them to open a bank account and/or Alipay account. Depositing salary directly into a bank account helps them to save, because they can take out some of the salary to send home, and also watch the remaining money grow slowly month by month. You could even create an incentive like “for every $500 you deposit in this account, I will add 10%, $50, up to a max of $XXX/month.”
Send them to attend financial training. Pay for the training and together discuss what they learned.
Enrich is a HK organization dedicated to helping migrant workers increase their financial IQ. They offer frequent workshops for helpers. Send your helper to a workshop as part of her employment package.
If you have found other ideas that work well for you, please leave a comment. Let us know what you think, agree or disagree, we’d love to hear from you.
