Don’t be reckless with money

READING about the demise of African Bank on the back of seemingly reckless lending of billions to over-indebted consumers, my mind was cast back to my mother who grew up in the immediate aftermath of the 1930 depression years.

She was widowed at the age of 40 with four children aged 15, 13, nine and five to care for. It was in the days before medical aids and – due to my father’s five-year-long battle with cancer – my mother was left with virtually no cash or other assets.

She was a nursing sister earning a lower middle class salar y.

To increase her income, she decided to take on longer night duty shifts, knitted caps and jerseys to sell, and on Saturdays she did washing for other people for a small additional income.

Running a household with four school-going children was tough.

We knew no “luxuries”: cooldrink from a can or bottle was simply not on the menu. “There is fresh water in the tap if you are thirsty.”

Apart from an old box radio for news, radio stories and the weather, we never owned stuff like tape recorders or record players.

Radio LM on a Sunday evening was the closest we got to listening to music.

We all took piano lessons and sang folk songs on a Saturday evening.

Eating at a cafe or restaurant was completely unheard of. “They charge you far more than what you would pay to make it yourself.”

Even on long road trips to visit our grandparents, my mom would pack coffee and sandwiches for enjoying at the white tables along the road.

Clothing, specifically school clothes, was expensive even in those days. The solution was to look after what you had well and then pass it on to the next one in the family.

As a third child, I never got my own blazer until Grade 11. I remember how my mother would change the buttons around from a girl’s blazer to make it fit a boy, and how she attached leather to the elbows to ensure a longer life.

The idea that you go and buy new clothes for every child was not affordable – her Singer machine and the cloth she bought from the Jewish trader was where our clothes came from.

Now if you earn a fairly small income, you have to budget and plan your expenses ahead. My mother had a number of envelopes: a food envelope, a petrol envelope (for the Opel she got from her father), a clothing envelope, a church envelope and a savings envelope (for the Post Office book).

What is in the envelope is the budget for the month. That is it. She was very, very scared of debt.

“If you cannot buy something cash, then leave it; or save up until you can. The bank lets you pay far more than you should.”

I remember how at one point the food envelope was too small. She went to the grocery store and asked the owner “to write things up until the end of the month”.

It was a form of forward credit with no interest. The first stop after she got her salary was the store in Aliwal Road.

“If you do not see the money for what you buy, you will easily buy too much,” she said long before complex things like credit cards and virtual money were known.

Now my mother would be considered odd and old fash- ioned in today’s world. We, her children, have adapted well to the consumer and immediate satisfaction culture.

We lost the plot in many instances and could have been much better off if we had heeded her financial rules:

Rule one: If you are faced with increasing expenses but earn a fixed income, look around for opportunities to increase the income – even after hours – so that you avoid falling into debt.

Rule two: Cut out all unnecessary expenses and focus on what is really unavoidable or a necessity.

Rule three: Look how long you can use something and do not throw it away if a little care could make it last another year.

And by the way, do not be

‘ Now if you earn a fairly small income, you have to budget and plan your expenses ahead

ashamed to wear old, but clean clothes, or drive an old model, but reliable car.

Rule four: Cut out all those luxury “necessities” – eating out too often, and replacing cellphones or notebooks that still work well only because you “must have” another application.

Rule five: Be afraid of debt and rather wait. There is no reason why you should have that luxury item today.

There are only a very limited number of “good debt” opportunities – the rest make other people like the banks and micro-lenders rich.

My mother died at age 81 and still left money in her will.