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It's April Fool's Day and I think it might be a great opportunity to write about why many Filipinos get easily fooled by financial scams. I was doing some reviews of mistakes I made and mistakes others make. I can't get over losing a huge sum of money to a family friend. I can't get over how we also lost a lot of money to those who were supposedly close friends. It was also during my MBA days at the University of San Carlos-Main Campus when the scams happened and some MBA students were victimized. I was an MBA student at that time when I defied common sense by allowing a family friend to purchase in credit. I thought she would return the money after she paid for her first transaction. During the pandemic, I had gone on a blocking spree when I'm getting text messages offering to pay me a much higher pay (per day) when it was too good to be true. The Philippines will still need to develop its economy before it can be legitimate that Filipinos can get a minimum wage as high as its neighboring countries. Now, I would like to discuss the reasons why so many Filipinos are easily fooled by financial scams to give some enlightenment.
There's always the desire to get rich quickly without working for it
Is it me or has work been really almost been treated or looked down on here in the Philippines? I remembered how I dealt with such people in college. It was very common to have the mentality of wanting easy money without having to work for it. I even started to doubt what I was taught in Civics and Culture in elementary about Filipinos being hard workers. Yes, some Filipinos are hard workers but it seems that the number is dwindling. Though, one can also think about the lack of job opportunities here in the Philippines as to why Filipinos can also be victimized. Some rely on the overseas worker remittances of that relative working abroad. Sure, there's big money sent from some countries but how can they learn to manage when they just keep waiting for the Balikbayan box and the breadwinner isn't there to teach them to manage? So, every last bit of money can be taken for granted because of a lack of business opportunities. They feel the gratification of huge money that the desire to get rich quickly is there.
In a country where menial labor seems to look down on--it seems that they want to get out of the "dishonorable job" as soon as possible. What happens is that they start to fall into financial scams when they're offered. It can go from joining a pyramid scheme or a Ponzi scheme (both are similar but different) to accepting sham text messages offering a huge figure per day. I suspect many of these text messages are from drug syndicates and the like looking for a new drug mule to use. Others may be hackers looking for the next possible victim with some money to steal or to use as a fall guy. The link goes from one person to another until the pyramid is formed when the people are promised to earn money via recruitment. The Ponzi, on the other hand, promises returns on a certain date. These are too good to be true but they're often bit because of that desire to get rich quickly.
Obviously, nobody gets rich quick by getting a job or investing money. Not even the stock market can promise guaranteed riches. Buying low and selling high is no easy task. Buying high and selling higher is even harder to do. That's why it's sometimes best to get a financial manager or to invest conservatively in the stock market. It's sometimes beneficial to buy stocks and hold them for a longer period of time as a long-term investment. A job's paycheck to paycheck means you need to learn to manage that money. Don't always go on a blowout yet payday seems to be associated with blowouts than managing the money for the needs. It's stupid to keep having blowouts when you live by paycheck to paycheck. It would be better to pay necessities like rent, tuition, and utilities first. Yet, some people tend to take their paychecks for granted. Some may even be living on overseas worker remittances explaining why some of them tend to remain poor.
Obviously, nobody gets rich quick by getting a job or investing money. Not even the stock market can promise guaranteed riches. Buying low and selling high is no easy task. Buying high and selling higher is even harder to do. That's why it's sometimes best to get a financial manager or to invest conservatively in the stock market. It's sometimes beneficial to buy stocks and hold them for a longer period of time as a long-term investment. A job's paycheck to paycheck means you need to learn to manage that money. Don't always go on a blowout yet payday seems to be associated with blowouts than managing the money for the needs. It's stupid to keep having blowouts when you live by paycheck to paycheck. It would be better to pay necessities like rent, tuition, and utilities first. Yet, some people tend to take their paychecks for granted. Some may even be living on overseas worker remittances explaining why some of them tend to remain poor.
Having high standards of living when you don't have the money for it
Why do some people decide to get into get-rich-quick schemes? Talk about a high standard of living when you don't have the money for it. I remembered how irritating it was to talk to a poor person who wanted to have everything expensive. Some people have the mentality that the most expensive is always the best--never mind something expensive might be overpriced. The Balikbayan box may be bringing expensive items such as branded rubber shoes and branded wear. If the overseas worker was in a first-world country--chances are that their salary abroad was able to afford it. However, such may not be the case in the Philippines when it's still in rising status. If one has high standards of living then you can expect that people want more money to spend rather quick.
These high standards of living can be rather ridiculous. Buying the latest iPhone when you're living on a paycheck and you've got rent to pay. Buying a car when you don't have a garage and you can't afford gas. Buying an air conditioner when you can't pay for higher electricity. Why not learn to settle for an electric fan and buy the air conditioner when you've got a lot more money Buying branded bags that cost PHP 25,000.00 and have no money inside them! Why not get a bag worth PHP 1,000.00 and have PHP 24,000.00 in it? People who buy to impress don't care about the money--they just want to look good even if it costs them a lot of money. Need I mention that blowout day tends to be another killer when the blowout is in a very expensive restaurant? Is a coffee shop or a casual restaurant isn't enough for a payday blowout? They decide to even blow out in very expensive restaurants draining the money to pay off necessary bills.
Gambling losses because one wants to get rich quick by gambling
Nobody gets rich gambling except those who sponsor it. Gambling addiction is a vicious cycle. People can get lucky with a bet so they bet higher hoping to get it back. However, the chances of losing in gambling are much higher than the chances of winning. That's why those who run the gambling dens get a profit in contrast to those who gamble in them. How sure are you your fighting rooster or your latest Axie Infinity purchase will win? It's pretty much more based on chance than the manageable risk in the stock market. The stock market is driven by the supply and demand of buyers and sellers. Interest rates, currency rates, economics, politics, and public perception can affect stock prices. However, gambling is all based on chance whether or not you win or you lose.
I still think about the problem of gambling to get rich quick. I think people would rather gamble than invest their money is because of the thrill. Buying stocks and waiting for them to go down can be boring. Waiting for the stock prices to go up doesn't happen quickly either. Sometimes, those who invest in stocks will need to wait for the prices to change depending on their objective. Sometimes, the financial manager will say, "It's best to hold. Just save your money." when updates are done in regards to stocks. In gambling, the sake of the thrill is there, especially when the roulette turns when the gambler hopes that the bet will be made. The slot machines are also rather tricky since it's based more on chance than anything. Yet, it's more exciting than waiting for the stock market to go down or up depending on your objective. Some people are still waiting for a good time to buy or sell stocks. It really can get boring so the thrill of gambling becomes that dangerous alternative.
Burdened in debt due to causes previously mentioned
Debt burden can be another reason why people get into financial scams. One could think that if a person has so many creditors--they would want to pay them off as soon as possible, right? What happens next is that such people can be worthy targets of financial scammers who need as many gullible people to fall into their trap. After all, word of mouth really works like a charm and these financial scammers get excitement in manipulating people who are in debt. Debts are piling up and so are the creditors. I heard that five-six lenders can get super aggressive with wanting their money back. Loan sharks themselves are also prone to using violence. That's why this debt burden is a real killer to those who are stuck in them.
Let's think if a person has this lifestyle. This person wastes their paycheck every blowout day. The result is that this person starts to borrow money from A, B, and C, to pay stuff like groceries, utility bills, rentals (if one's renting), and the children's tuition fee. The person's refusal to stop blowout day (by the fallacy of appealing to tradition) ends up causing the debt burden. This can also be accompanied by heavy drinking and trying to get rich quick by gambling. Gambling ends up having so many huge debts because many of its players want to get rich quick. I couldn't imagine how much money is wasted with that kind o lifestyle. The solution ends up with even more debt to pay more debt. It sounds stupid but it can happen to anyone who doesn't manage their finances well. This happens even worse when Christmas comes because the Christmas bonus and/or 13th-month pay may have been wasted on blowout days and gambling. Some borrow more money for an extravagant New Year after having an extravagant Christmas party.
A person burdened with debt can't think clearly either. One could only think that the loan sharks will be looking for that person. I was thinking of how January can be quite amusing. I was driving my car and I saw some Indian men in traditional clothes riding motorcycles. It was a common assumption that the Indian guy could be out there looking for the person who owes them money. Though I had some Indian friends and they weren't lending at five-six. However, knowing that the bad habit of lending without returning is common makes me think otherwise. Besides, it's a common joke I heard on local TV before that the Filipino won the race against the Chinese and the Japanese. The reason was that the Chinese and the Japanese were chasing the Filipino athlete as both were wanting their money back.
Lack of financial literacy is really one root cause of such
A lot of people fall into it because of a lack of financial literacy. Maybe, I could start raising it up how K+10 is really stupid. Trying to learn math, science, economics, etc. in just four years in high school is basically cramming. Why should students wait until they are either in third-year or fourth-year high school before they learn the importance of economics? I even feel like telling my teacher in economics back in high school that I feel stupid about it. Economics is part of life so why was it only taught in fourth-year high school? K+12 should've been implemented years ago during Ramos' administration to keep the Philippines on par with the other ASEAN countries. I only felt I learned how important economics was with a very limited 12 units of economics in college--three units during my Associate in Computer Science (ACS) days, six units during my Bachelor of Science in Business Administration Days (BSBA), and three more units during my Masters in Business Administration (MBA) days. At this point, I feel teaching economics only in the graduating year of high school is stupid. Economics needs to be taught but the timing and spreading are ridiculous.
The problem of a lack of financial literacy makes it easy to pass through many obsolete ideas. Singapore's Lee Kuan Yew had to face that many of the people were financially illiterate. It's no wonder why he mentioned that development economists of his time espoused economic protectionism. Lee Kuan Yew had to challenge the critics by proving that they were wrong on more than one angle--it was by bringing in multinational corporations (MNCs) to Singapore to provide jobs. The critics were a result of economic illiteracy. Others were probably just after their own self-interest to propagate the idea that MNCs were exploiters--something that Filipinos tend to buy for a very long time such as how some protested regarding the Public Service Act of 2022 signed by President Rodrigo Roa Duterte. If I could remember, some even badmouthed the late Benigno Simeon Cojuangco Aquino for bringing in foreign investments in certain areas which didn't include public services.
Having very little knowledge about financial literacy has been deadly. I remembered how one could comment, "I thought you were an MBA. Why don't you know about cash to go?" After a heated argument, the person said, "This proves that the Philippine education system is a dump!" Yes, it's a dump and the Philippine education system has been a bigger problem. The more I review my education in the past--the more I think that something was wrong with it. Economics should be taught in both middle school and high school. Economics was so strange to me until I was in college. Even I felt that common sense is hardly taught in almost every school. It's almost like school has been defeating its purpose. Rather than educate, it has de-educated students by not teaching financial literacy.
I believe financial literacy needs to be taught as early as middle school and not just in high school. Middle school is basically when allowances may increase. Teenagers are prone to impulsive spending based on my experience. Home economics shouldn't be the only subject to teach that. Economics should be taught in both middle school and high school also for that reason--teenagers have a very blank understanding of how it works. It's really nearly as bad as how math is taught without knowing the practical application. This should at least start to develop some financial responsibility aside from learning values education and home economics.
Resources
"Top 9 Reasons Why Filipinos Easily Fall for Scams" by Sheila (March 18, 2022)