Money LESSONS FROM A SO­CIAL EXPERIMENT

Maya Fisher-French shares her ex­pe­ri­ence of fol­low­ing the One Rand Fam­ily

CityPress - - Business - Can you be a One Rand Fam­ily?

If you haven’t fol­lowed the tri­als and tribu­la­tions of the One Rand Fam­ily, which aired on e.tv dur­ing July, it is re­ally worth catch­ing it on YouTube or the One Rand Fam­ily web­site, at onerand­fam­ily.san­lam.co.za. The pro­ject was spon­sored by San­lam and fol­lowed the ex­pe­ri­ence of a rel­a­tively well-off fam­ily liv­ing on cash only – R1 coins, in fact – for a month. The fam­ily’s in­come was paid out in the coins, which were put into plas­tic con­tain­ers – or skhaf’tins.

The se­ries has res­onated with many South African fam­i­lies who re­alise they are not alone when it comes to try­ing to fig­ure out where all the money goes dur­ing the month.

I was for­tu­nate to be in­volved in the pro­ject from the be­gin­ning and spent some time analysing the fam­ily’s bud­get and spend­ing pat­terns. Their fi­nan­cial story is a mir­ror of the av­er­age South African house­hold.

Be­fore the show started, the fam­ily was asked to write down their bud­get. At first glance, it looked as if they were com­ing out each month – but only just. How­ever, a closer look re­vealed that they had left many ex­penses off the list. This high­lighted that the fam­ily had not put a bud­get to­gether be­fore and did not have a real idea of how their money was spent each month.

As Londi, the mum, ad­mit­ted, she swiped her credit card with­out even think­ing about whether she could af­ford it.

It was clear from the be­gin­ning that the fam­ily was in for a nasty shock when their money ran out be­fore the end of the month. In the fi­nal week, they were forced to bor­row money from the pro­duc­ers of the show to meet re­pay­ments for their BMW. This made them re­alise that, de­spite hav­ing well-paid jobs, they re­lied on credit each month to sur­vive.

The fam­ily faced their big­gest shock when all their money was put into piles and they re­alised their credit card re­pay­ments were equal to their pen­sion con­tri­bu­tions. We are not even talk­ing about the amount that went to the mort­gage and car re­pay­ments each month. The fam­ily spent more money on pay­ing bank in­ter­est than on con­tribut­ing to their fu­ture. In this sce­nario, it is im­pos­si­ble to grow wealth – in fact, they are con­tribut­ing to the wealth of the banks’ share­hold­ers at the cost of their own fi­nan­cial se­cu­rity.

Nearly half of Londi’s take-home pay went to re­pay her car. When both of the cou­ple’s car pay­ments plus in­sur­ance and petrol were com­bined, it com­prised half their house­hold in­come. While Londi jus­ti­fied her car choice in terms of sta­tus and the fact that it made her feel good, the re­al­ity was that they sim­ply could not af­ford their cars, which had a ma­jor im­pact on their abil­ity to grow real long-term wealth. In the last episode, the fam­ily re­alised they were liv­ing one car pay­ment in the red each month.

In the be­gin­ning, Sbu, the hus­band, be­lieved his wife was re­spon­si­ble with money and thought care­fully be­fore she spent. Londi ad­mit­ted that this was nowhere near the truth and she of­ten hid her pur­chases – but she, in turn, be­lieved that Sbu was good with money.

In the end, they both had to re­alise that each of them had to take re­spon­si­bil­ity for the fi­nances in the house­hold and hold one another ac­count­able.

In or­der to im­prove your fi­nan­cial sit­u­a­tion, both spouses have to be com­mit­ted to the process and take col­lec­tive re­spon­si­bil­ity for the fam­ily’s fi­nan­cial fu­ture.

The vir­tual method:

It is very easy to get into debt when you have a piece of plas­tic that al­lows you to buy stuff with­out re­ally know­ing if you are spend­ing your money or the bank’s. As Rafiq Lock­hat, a clin­i­cal psy­chol­o­gist, ex­plains: credit cards were de­signed by psy­chol­o­gists to make you spend money you don’t see.

When the fam­ily was on hol­i­day in Dur­ban, they re­alised they spent half what they nor­mally would have be­cause they were us­ing cash in­stead of credit cards.

The cash method:

With a lim­ited num­ber of coins and no credit cards to fall back on, the fam­ily had to make ev­ery R1 count.

When faced with a lim­ited bud­get, Londi started to ac­tu­ally look at the prices on the shelves for the first time and made more in­formed buy­ing de­ci­sions when gro­cery shop­ping.

The fam­ily found less ex­pen­sive ways to en­ter­tain other fam­ily mem­bers and friends – and dis­cov­ered the joys of the sim­ple plea­sures in life.

From think­ing about cars as a sta­tus sym­bol, they started to see them as “a lot of skhaf’tins” and, in the end, for a woman who lives for her credit card, Londi took the dra­matic step of cut­ting up hers, with the full sup­port of her fam­ily.

Change is pos­si­ble, but it starts with aware­ness.

SKHAF’TIN SHOCK

The One Rand Fam­ily lived on cash only – in R1 coins – for a month, and re­alised that they were spend­ing more than they earned

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