Cedrick Pila, Regional Manager at Allan Gray
Netflix’s smash hit show Squid Game may not be for everyone due to its shock factor and gruesome violence, but it is a relatable story that hits close to home for many over-indebted households. The show, ultimately about how the hopelessness of those in debt translates into decisions and action, depicts contestants who are in financial trouble competing in playground games for prize money. But the stakes are high: You lose a game, you lose your life.
“Even though the show is fantasy, there are stark parallels with real life scenarios, especially coming off the back of COVID-19, massive job losses, salary cuts and debilitating debt,” says Cedrick Pila, Regional Manager at Allan Gray.
Although South Africans are feeling the pinch, the good news is, besides providing entertainment, the show allows the audience to learn through the mistakes of fictional characters.
“Many of the show’s characters get into trouble because they let their short-term decisions and behaviours impact their long-term financial success. By watching the show through a personal finance lens, you can learn valuable lessons and either avoid making them or, if any of the situations feel familiar, then know that there are actions you can take before it is too late,” says Pila.
Below are Pila’s top money lessons from Squid Game:
1. Betting doesn’t make you rich
Gambling, or being tempted by the promise of easy money, is a huge theme in the show: Players essentially take a bet on their lives for the slim chance of becoming rich.
“Gambling is the idea of making money quickly with little to no effort, but the truth is that personal wealth takes time and patience to grow, and there are no short-cuts. This is backed by rational decision-making.”
He says many investors also try to time the market in an attempt to profit from turning points, but this isn’t wise.
“Hedging bets on what markets are going to do, or betting on short-term movements, is speculation, and may lead to loss, rather than financial gain,” cautions Pila, quoting Warren Buffett, who warned investors about treating the stock market like a casino and instead advised patient investment in quality companies.
“Sometimes the best action is to do nothing at all. Once you invest, leave your money alone. This is because time allows your invested money to grow and compounding makes your money work harder for you. Given a long enough period to work, compounding can dramatically work in your favour.”
2. If it seems too good to be true, it usually is
Squid Game reminds us that get-rich-quick schemes lead to bad outcomes, as the theme of financial loss is prevalent throughout the show: The protagonist, who has a gambling addiction, has racked up huge debt and owes money to loan sharks. Another character – who worked at an investment firm – is in deep trouble after having stolen money from clients and lost it on the stock market, accruing a debt of billions.
“We want great returns and we want them now! This ultimately makes us susceptible to fraudulent schemes. It can happen to anyone: Consumers facing large amounts of debt, financial stress and unexpected expenses are most vulnerable.”
In a post-pandemic era where fraudsters are rife in an effort to make a quick buck, trust your gut: If it seems too good to be true, it usually is. Also, anything that has a sense of urgency to it e.g. “once-in-a-lifetime opportunity”, should raise a red flag.
3. If you are drowning in debt, there are options
The more obvious lesson in Squid Game is around the deep spiral of debt. Contestants are desperate to do whatever they can to get out of their money troubles, often with disastrous consequences.
“Rising food and astronomical fuel prices are putting further financial pressure on indebted South Africans, so the feelings of the characters around being desperate and overwhelmed hit close to home. For many fans of the show, the stress, anxiety and health issues surrounding debt are real.”
He says the first thing to know if you are struggling with debt or being overwhelmed is that you are not alone.
“There is support out there to learn how to navigate debt, become financially literate and shift gears into a saving and investing mindset. There is no shame in asking for financial help.”
He says that getting out of a situation of deep debt requires immense discipline and diligence, and while the journey may not be easy, the important thing is to take small steps.
“The best antidote to debt includes a plan, the right advice, and a disciplined budget complemented by a savings plan. If you get this right, you can meet your immediate responsibilities and achieve your longer-term financial goals. Remember to think carefully about the type of credit you take on and whether it will help you achieve your goals or chip away at your long-term wealth.”
4. There is no pot of gold at the end of the rainbow; plan for a rainy day
In the show, winners go on to compete in the bloody games until there’s only one person standing. The winner takes home a US$38.6 million cash prize, which accumulates in a piggy bank suspended above the contestants’ barracks throughout the show.
“In real life, there is no proverbial pot of gold at the end of the rainbow to bail us out of trouble,” says Pila. “Financial emergencies will crop up from time to time and, if you are not prepared for them, they can have a lasting impact on your finances.”
One of the best things you can do is build and maintain an easily accessible emergency fund. Most experts suggest that you should build an emergency cash reserve equal to the value of at least three months of your expenses.
“An emergency fund can be a lifesaver when you need access to money and will help you avoid taking on unnecessary debt or jeopardising your long-term goals by dipping into your investments. This allows you to protect your wealth.”
It’s also crucial to make space in your budget for saving for retirement.
“Consider investing in a retirement annuity, which is a retirement savings product that you can take out in your own name, or supplement your pension savings through your employer with a tax-free investment.”
5. You are not enslaved by your financial burden
Pila says it is never too late to start new financial habits.
“Taking action now will have an impact on your longer-term goals. And if you can’t do it alone, there is no shame in asking for help. A trusted financial adviser can be your biggest ally in getting your personal finances sorted.
“The biggest lesson the show teaches us, is that you don’t have to be enslaved by your financial situation. Put another way, remember that the hand you’re dealt is sometimes less important in determining your future, than how you play it,” concludes Pila.