In Hong Kong, domestic workers typically earn much more than they might be earning in their home countries. This sudden influx of perceived wealth can create an unhealthy relationship with money if a person isn’t disciplined with their finances and educated in how to manage their spending. 

Most people do not get taught financial literacy in school and one of the first lessons we teach at our Money Wise Migrants workshop is how to distinguish between a ‘need’ and a ‘want’. Many domestic workers don’t realise that they can achieve a lot if they plan long-term and save in the right way. 

Very often, they face temptation from cheap products or attractive deals - a keen observer in Central or Victoria Park on a Sunday would spot carefully marketed products in stores or informal vendors circling to different groups selling clothes, bags, jewelry, cosmetics and so on. At HK$20 here or HK$50 there, it becomes easy to overspend without realising it. 

Also, once they are in Hong Kong, domestic workers are considered to be comparatively wealthy by their families for whom the salary seems like a lot of money - this places added pressure on domestic workers, especially if they are the sole breadwinner. They are often unable to tell their families of the realities of their situation here, or they struggle with guilt from leaving their children. Therefore if the family requests gifts, it can be very hard for a domestic worker to say ‘no’ - another challenge we specifically tackle in our workshop Money and Family. Curbing your spending is hard for anybody but these skills can be learned.

Often, domestic workers sign high interest loans because they have no choice, or maybe because they don’t know whether the interest rate is actually high/legal or not. 

With no access to formal credit (bank loans) in Hong Kong, they often need to borrow from money lenders in Hong Kong. 

According to the Money Lenders Ordinance, borrowers can legally be charged up to 48% of annual interest on a loan by licensed money lenders. If it can be proven that they are a high risk borrower, they can be charged up to 60% of annual interest.

Also, money lenders make loans very easily accessible to migrant domestic workers in Hong Kong. Basic requirements are employment contracts and HKID. If they are good borrowers, they may be invited by these loan agencies to renew their contracts and apply for another loan. This could be very tempting to the workers, whether or not they really need the money. In our experience, many domestic workers only focus on the monthly repayment amount and underestimate the significance of the interest rate, often because they may not know how the calculations work.

If they have an existing loan with a money lender or if they’re not eligible to borrow for some reason, some domestic workers might turn to unlicensed money lenders or individuals to borrow money. In these instances, they can often be charged extremely high monthly interest rates (e.g. 20% per month) and might even be asked to provide their passports as collateral (which is illegal). 

Very often, domestic workers might see borrowing money as the only solution to urgent financial needs - financial education can equip them with the tools to plan in advance and prevent these situations from occurring.  

A 2017 impact study by the Chinese University of Hong Kong found that following our workshops, there was a 40% decrease in Enrich participants who reported taking on loans without first having a repayment plan. Learn more about our impact.

It can understandably be confusing to hear that your helper is short of money - after all, as her employer, you cover the main expenses of accommodation and food. However, domestic workers can still face many pressures on their finances which can lead to a shortfall each month, or severe debt at an extreme level. Here is where her money might go:

Family expenses

For most domestic workers, the main reason they are here is to support their family (often including extended family members) - 50-60% of their monthly salary can typically be sent home. 

Additionally, once they are in Hong Kong, domestic workers are considered to be comparatively wealthier by their families for whom the salary seems like a lot of money - this places added pressure, especially if they are the sole breadwinner. They are often unable to tell their families of the realities of their situation here, or they struggle with guilt from leaving their children. Therefore if the family requests gifts or more money for expenses, it can be hard for a domestic worker to say ‘no’ - a challenge we specifically tackle in our Money and Family workshop. 

Loan repayment

Money might also go on repaying debts - Mission for Migrant Workers estimates that domestic workers spend about 36% of their salary on loan and agency fees. Debt can be accrued for many reasons including recruitment fees, emergencies, major expenses or even holiday expenses. Loans can also be needed to cover finances lost due to investment scams, ponzi schemes or even friends’ or family member’s loans for which many domestic workers sign as guarantors (without always knowing the legal responsibility). 

A 2017 impact study by the Chinese University of Hong Kong found that following our workshops, there was a 40% decrease in Enrich participants who reported taking on loans without first having a repayment plan. Learn more about our impact.

Big expenses or emergencies

With poor future planning, many sudden or large expenses can also place a huge strain on domestic workers’ finances; for example, without an emergency fund set aside, they often have to take out loans if there has been a natural disaster or medical emergency at home. 

Others

Other regular expenses can include communication expenses, transportation costs, toiletries, clothes and accessories and even donations to charities or religious institutions. 

If you are concerned about your helper’s spending, consider sponsoring her to attend our financial and empowerment education programmes, or refer her to us for a confidential one-to-one financial counselling session to evaluate her finances and help her shape a plan to move forward.