July is National Savings Month. Yawn.
This time every year my inbox gets clogged up with boring, worthy press releases written by bored copywriters banging on about the dismal savings habits of South Africans and how indebted we are. Sometimes they employ scare tactics and sometimes they’re preachy. But always they are boring.
This year I haven’t received a single National Savings Month press release. Either they’re still coming or the copywriters are refusing to write them. I can only hope it’s the latter.
But this time every year, I ask myself the same question: “Self, do you want to live on a diet of cat food in your old age? Do you? Do you? Well then: save more!”
But I never do.
Why is that?
Students of behavioural finance reckon it’s because we have no concept of the future value of money.
The good folk at Sanlam say that in a world of plastic money, debit orders and generous overdrafts, we’ve lost our connection with money.
To mark National Savings Month this year, the life assurer is funding a social experiment dubbed the One Rand Man.
hard cash
The One Rand Man is a 32-year-old architectural consultant from Cape Town who received his last salary in R1 coins and, for the month of July, will live on R1 coins in an attempt to connect with his cash.
With his debit orders on ice and no access to his bank cards or bank accounts, he will have to physically manage every R1 coin in his possession.
Imagine paying your rent, car instalments or for your groceries – in R1 coins.
The big question is, will the exercise take the One Rand Man closer to his money and will this connection induce him to spend less and save more?
Or will he drink himself to death playing coinage? Or feed all his coins to the slot machines at GrandWest Casino?
You can see for yourself by watching the documentary episodes of his experience on You Tube. You can also follow him on Twitter (@OneRandMan).
Well done, Sanlam. There’s curiosity value in this. If you can inspire us to save, everyone wins. (And thank you for not issuing a preachy press release.)
In the promo video, we meet the (hot) One Rand Man. He tells us his life is “pretty good”. Er, of course it is: he lives in Cape Town, earns a good salary, plays golf, rides a mountain bike (and he’s hot. Did I mention that?). His life’s a beach! Except he says that the more he earns, the less he has.
“Where does my money go and when did I start losing track of it?” he asks?
I caught up with the One Rand Man late this week. He sounded harassed. So would you if you had spent your day counting thousands and thousands (he’s not saying how many) of coins.
“I got my girlfriend to help me sort the coins, but now I’m looking at buying a scale of some kind to make it easier,” he says wearily.
He decided to do the experiment because, he says, “it’s an opportunity to grow” and he can see how it could be beneficial to others. He says he really would like to master his money, but he doesn’t know how. He’s tired of running of out money half way through the month.
Yegs Ramiah, chief executive of Sanlam Brand, says the One Rand Man is typical of how many people today relate to money. For this reason, Sanlam is giving him a platform to share his story. We generally spend more when we spend on a card, Ramiah says.
With people so disconnected from money these days, we don’t feel the implications of our spending. “And because it’s so easy to spend – and to spend money that we don’t actually have – many South Africans find themselves spiralling rapidly into debt.”
Ramiah says that Sanlam believes it’s worth promoting any insights which may lead to increased savings.
Following each episode, experts will provide analysis and commentary so that any key lessons can be shared with a wider audience. And for the next four weeks, Personal Finance will report on the adventures of and challenges experienced by the One Rand Man.
This week we speak to experts in behavioural finance about the effects of being disconnected from your cash (see “Connecting with your cash is king”, above). They say most of us don’t have a clue where our money is going and how vital it is to budget and have a financial plan.
The One Rand Man says that his studies taught him to pay attention to detail, yet for some reason he hasn’t applied this to his finances.
When I asked him if he has a financial adviser, he said: “I have a personal banker.”
I found that worrying, considering that personal bankers are not independent (they’re bank employees) and their level of qualification is nowhere near that of a Certified Financial Adviser.