By Hennie Pretorius, journalist, JustMoney
Last month was National Savings Month and as part of a savings campaign by Sanlam, an architect from Cape Town took on the challenge to live out his month using cash only – in the form of one rand coins.
The One Rand Man woke up yesterday (31 July), with much lighter pockets, having only R5 left to get him through the day (clearly he doesn’t get paid on the 25th like most South Africans). Even if the train lines were operating smoothly, this wouldn’t get him very far.
“There is no better time to start saving than now,” were often the words spoken by the One Rand Man - words unheeded by a society lacking a savings culture.
How effective was this exercise in teaching the One Rand Man and fellow South Africans to save? Why would dealing in R1 coins suddenly initiate an about change into a frugal way of living?
Lessons learnt
It felt as if one of the scariest moments for the One Rand Man wasn’t his girlfriend breaking up with him halfway through the month – it was when he had to lock away his credit cards. His challenge was to survive on his salary alone, with no help from the banks.
Perhaps the banks would become extremely concerned if everyone were to use cash only, many of them might be out of business within a month. The One Rand Man admitted he would usually start making use of his credit cards by the 20th of the month.
He was shocked, after finally figuring out that a scale would be an easier and more accurate method to count his one rand coins, that his biggest expense was his car. Sadly, nowhere in his piles of stacked one rand coins, secured in plastic containers, had he put aside money for savings.
There were boxes dedicated to spending money otherwise everything else went towards services and expenses. Surely writing up a simple budget would’ve ascertained this? And now that the One Rand man is going to ditch the ‘living with coins’ lifestyle is he truly going to write up a budget from now on?
This exercise has made him realise that savings should have been included in his monthly piles of expenses. It shouldn’t be an afterthought. By the time the end of the month arrives, all the cash is spent and none of it had been put aside for savings.
He did however mention that saving towards having children one day and a house are both on the list now.
Towards the end of the month when the cash was low entertainment included going for hikes and getting in touch with nature again – activities that did not require spending lots of money on. But I guess he fails to mention how he got to these idyllic sites – surely petrol or transport costs should’ve been factored in?
Was it worth it?
Clearly his endeavours makes one realise that saving should never be an afterthought. It should be prioritised and included in the piles of ‘necessary’ expenses, before luxury spending such as dinners out or a day on the golf course. At Justmoney we call saving ‘paying yourself’, which is actually a better way of framing it mentally than ‘putting money away’.
We do not think the exercise in itself was practical. For one thing, security is a concern. Walking around with cash is not wise. What if he’d lost the money?
The One Rand Man must have come across as inconsiderate. The cameras didn’t depict this but imagine the queues of people waiting for him to count out his coins in the grocery store. Spare a thought also for the frustrated waiter having better things to do such as delivering food to the customer glaring at the One Rand Man for ruining a perfect night out with his wife. We also thought with road rage at the level that it is, it would not be wise to pay for your fuel in coins.
Even though the exercise had good intensions, it was not well thought out. Ironically, the first course of action the One Rand Man wanted to take involved spending. He bought a decent backpack that “suited” his style to carry the money in.
It took him a while to realise he would be better off using a scale to count the money. Not only did counting the money take a long time, it was not accurate.
Using cash to pay the bills is an expensive exercise, both in time and money. There are often extra bank charges related to cash transactions and it takes a lot of time having to physically pay your monthly accounts as you would have to visit each accounts department individually, you can’t just click away at your computer using internet banking.
Even the One Rand Man admitted on air – he would never attempt such an exercise again, as much as he loves a challenge.
Some of you may wonder ‘What was the point of all of this?’ The One Rand Man clearly did not have a savings plan in place. We guess this is where Sanlam enters in the next instalment – lighting the way for its savings and retirement products.