HEY, BIG SPENDERS

Maya Fisher-French asks if our gen­er­a­tion has lost the plot when it comes to the cost of liv­ing

CityPress - - Business -

Does our gen­er­a­tion spend more on nonessen­tial items than our par­ents did? This ques­tion came up re­cently at a busi­ness break­fast while I was chat­ting to some­one about our cof­fee ad­dic­tion.

When did a daily cap­puc­cino be­come a ne­ces­sity? I am as bad as the next per­son when it comes to my daily caf­feine fix, so is it be­cause of peo­ple like me that high-end cof­fee shops are mush­room­ing across city cen­tres?

Ac­cord­ing to Cof­fee Mag – yes, there is a whole mag­a­zine ded­i­cated to cof­fee – the num­ber of cof­fee roast­ers has in­creased from 20 to more than 150 in just 10 years.

When did this hap­pen? And it doesn’t just stop at cof­fee. Com­pared with our par­ents’ gen­er­a­tion, we are spend­ing more on eat­ing out, branded cloth­ing, cars and en­ter­tain­ment. Re­mem­ber grow­ing up when there were only two TV chan­nels to watch? Now DStv is con­sid­ered an es­sen­tial item, with sur­veys show­ing that peo­ple will can­cel their life po­lices be­fore they can­cel their DStv sub­scrip­tions.

Grow­ing up, it was a big treat to go out for din­ner. This was usu­ally re­served for birthdays and other spe­cial oc­ca­sions. Now my kids eat out at least once a week.

Re­cently, my mum sent me an email af­ter read­ing one of my ar­ti­cles about the pres­sures fac­ing the mid­dle class. She wrote: “We of the older gen­er­a­tion are of­ten horrified at the waste. The war years taught us how to make ev­ery penny count. There are hun­dreds of money-sav­ing tips that I can think of. Maybe when things get really tough, peo­ple will go back to that way of think­ing.”

She makes a great point. We may be com­plain­ing about fi­nan­cial pres­sure, but is it that tough yet?

At the busi­ness break­fast, we be­gan to dis­cuss how it is that we are able to live a life­style our par­ents could not af­ford. One of the rea­sons was that we save less, which is prob­a­bly true, but I think it is also be­cause we bor­row more, thanks to the pro­lif­er­a­tion of credit cards, store cards, per­sonal loans and car fi­nance.

Many of us used the eq­uity we built up on our homes in the prop­erty boom of the 1990s and early 2000s to bor­row more. Eco­nomic Free­dom Fight­ers chief Julius Malema even said re­cently that the mid­dle class had mis­taken cred­it­wor­thi­ness for be­ing rich.

Our life­styles are funded by debt. It is the only way we can main­tain those stan­dards. And we have all bought into the idea that this is the way we must live: we can only buy a car on credit; we can only sur­vive with a credit card; we can only buy clothes with our store cards.

In a re­cent in­ter­view, the CEO of Tru­worths was asked about the ef­fect of in­ter­na­tional re­tail­ers like H&M and Zara ar­riv­ing in South Africa. His re­sponse was that they were of lit­tle threat to Tru­worths be­cause they do not of­fer credit. Tru­worths has more than 3.5 mil­lion ac­count hold­ers. What he was say­ing, in essence, was that, with­out credit, peo­ple can­not af­ford to buy clothes, be­cause they don’t have the cash avail­able.

As if this wasn’t al­ready proof of a per­fect storm, I then heard some longevity fig­ures that made me afraid. Over the past 40 years, the world’s pop­u­la­tion grew by 100%, yet the num­ber of peo­ple liv­ing be­yond the age of 80 in­creased by 324%.

Liv­ing longer means that if we are re­tir­ing at the age of 60, we will need to be pre­pared to fund at least 25 years of re­tire­ment. This means more sav­ing and in­vest­ing than ever, yet what we are see­ing, ac­cord­ing to the Old Mu­tual Sav­ings & In­vest­ment Mon­i­tor, is that more re­tirees are en­ter­ing re­tire­ment with debt than be­fore.

We have a big prob­lem. We are ad­dicted to credit and the life­style it af­fords. But how do we kick that ad­dic­tion be­fore it kills us?

Chang­ing our life­styles is hard. Peo­ple feel very de­prived when some­thing is taken away from them, and it is un­likely that the ma­jor­ity of households would ad­just vol­un­tar­ily. What if we just made a com­mit­ment to stick to the life­style we have and not fund it any fur­ther?

Maybe the so­lu­tion is that we de­cide to­day that what we have is enough, and that all fu­ture salary in­creases and bonuses go to­wards in­vest­ing in our fu­ture rather than to­wards spend­ing in the present.

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