Cape Town, 26 August 2015: One month after returning to ‘normal’, have Sanlam’s One Rand Family (ORF) fallen back into their old ways? Or did their month living only on R1 coins effect a more permanent change in their behaviour? Fortunately, according to the ORF’s mom Londiwe, the changes in their financial behaviour and attitudes are significant and long-lasting.
“We learnt so much in July and it has really filtered into our family’s money ‘culture’. When we started I must admit my spending was a bit out of control and I used my credit card quite recklessly. But something inside me has changed and cutting up my credit card at the end of the experiment was a symbol of this shift. We have a totally new attitude towards debt, are excited about savings and are taking a much longer-term view of our finances.”
Here are ten examples of the family’s shifting attitudes:
1. They are focusing on their retirement
“It’s interesting that we had the opportunity to take part in the experiment at this stage in my life, as I’m starting a new job on 1 September. In the past, I saw my company pension savings as a large pool of money that I could spend on the things that I thought I needed. I now realise that this isn’t a pool of money I should be accessing now. It is money for later in my life when I’m no longer earning. Now we’ve started discussing the different options for preserving the funds and where to transfer the funds so they continue growing.”
Sbu also doesn’t want us to be in the same position his parents are in when we retire one day. He wants us to be financially secure, so that we don’t depend on our children to carry us month after month. That’s why we’re putting the needed measures in place to make sure we break this cycle.
2. Repaying and eliminating debt has become a major focus in the household:
“My new job also comes with an increase in salary. In the past, I would have probably traded in my car and bought a new more expensive model, increasing the cost of my lifestyle significantly. Now, we’ll be taking the increase and putting it towards paying off our debt.”
“And my husband, Sbu, is adamant that he doesn’t want a credit card anymore. We’ve increased the monthly amounts of our debt repayments as well as the amount we put away for saving.”
3. They’ve realised the importance of setting a budget together and checking-in regularly:
“We made a conscious decision to keep our accounts separate when we got married, because that’s what worked for us. However, we made the mistake of never making a joint household budget so that we could get a clear picture of what our joint expenses would be. The problem is, after allocating responsibilities; we also never spoke about it again, meaning neither of us really knew the full financial picture of our household.”
4. Communicating about money has brought them closer:
“By having to face the challenge of talking to each other about money, something we never did, talking about other issues became a lot easier as well. We’ve started talking about our future again, what we want to achieve and what we need to do now in order to get there. It’s brought us closer to be able to plan our future and fix issues together we didn’t even realise we had to begin with. It is nice to be able to help each other understand the benefits of the experience and be there for each other when times are tough. By supporting each other throughout the month, we were reminded of how to play to each other strengths.”
5. They are in the process of starting a savings fund for their young daughter:
“Another important consideration has become Anaya’s future so we’re in the process of setting up an education fund for her so that we’re financially prepared when she wants to go to university.”
6. They’re investing time to teach their kids about money:
“When Njabulo was little, we used to give him chores and reward him with pocket money when it was done. It was our way of teaching him the value of money and that he had to work hard to earn it and appreciate it. We now realise that, although we taught him the first half of the lesson, we never continued by teaching him how to actually spend the money wisely after earning it. Luckily we have the time to change that with Anaya.”
7. They’re more aware of their cash flow and budget
“This experience has really taught us the importance of budgeting. You need to be aware of your cash flow – remembering to always have enough to stay afloat. It’s nice that my son Njabulo could see this as he will be able to apply it in his business.”
8. Save, save, save!
“That’s all we’re talking about in the house now. How we can all pitch in, as a family, to cut back on costs and ensure we live within our means.”
9. Spending time together is more valuable than spending money:
To cut back costs, the family now spends time together by going to the park and staying in to watch movies rather than going out and spending on entertainment. “It has brought us so much closer as a family.”
10. They are looking for the right professional advisor:
“We’re currently meeting with a number of independent financial advisors and once we find the right one, we’ll work with them to plan our finances going forward.”
“The mental shift has happened, which will make it a lot easier for the whole family to apply the lessons we’ve learnt. The experiment has changed our lives for the better, and for that we are very grateful.”
To help South Africans take control of their own financial futures, Sanlam has devised a range of free tools consumers can access to test what their money personality is, how their budget stacks up and tips on how to save. Simply visit www.onerandfamily.co.za.
Article courtesy SA Good News