Sex, politics, religion and money have always been the hot topics to avoid in social situations but, while attitudes have changes towards talking comfortably about sex, politics and religion, the subject of money remains taboo.
Money is difficult for South Africans from all walks of life to speak about, yet our financial decision making influences every aspect of our lives. And with South African consumer debt at a staggering R1.5 trillion, a national conversation about money is obviously overdue.
There can be no doubt that we urgently need to normalise our attitudes towards our bucks and how we spend them. Experts believe we aren’t comfortable talking about money because money is such an emotionally charged subject, whether we have it in abundance or constantly struggling to make ends meet, or are stuck in a cycle of poverty. Also, as money deals with numbers, there’s an expectation that our behaviours when managing it are rational, but that’s seldom true. As it’s bound up with our greatest dreams and deepest fears, it’s arguably the most fraught and loaded topic of them all.
Normalising the conversation about money
With such heavy baggage, why is it that we need to start talking about money?
One of the most pressing reasons is that South Africa is such a financially stressed country, especially in the wake of the Covid-19 lockdown. This is aggravated by the fact that, while contemporary culture is dominated by messages about materialism, we have the highest inequality rate in the world.
In a survey released by PayCurve in August, a startling 80% of respondents indicated that they often have to take expensive short-term loans in order to cover basic expenses. So it comes as no surprise that 70% said they have to pay a greater or lesser percentage of their monthly income towards short-term debt.
“In this situation, the challenge is two-fold,” says Aimee Miller, the Sales and Marketing Manager at Teljoy. “Firstly, we have to start having frank conversations about money as it’s essential to everything we do. Secondly, we have to start looking at the most sensible ways in which to meet our needs without falling into a debt trap that eats away at our financial security.”
Get past the emotion
In the first instance, any productive conversation about money has to begin with acknowledging our own thoughts and feelings about it as this has a profound, often almost subconscious, impact on our attitudes towards it and the ways in which we manage our financial affairs.
“Consider what it is that you like and fear about money; what it means to you, how it fits into your life and how it influences the way in which you relate to other people,” says Miller. “Our feelings about money are constantly changing, and are heavily influenced by our current circumstances, which is wh y we need to regularly evaluate what we think and feel about it. When we’re clear about our own feelings; it becomes easier to discuss finances with our partners, children, parents, managers or friends.
Ditch debt
The next best move is to ditch the debt.
In her bestselling book Manage Your Money Like A F*cking Grownup, Sam Beckbessinger talks about how important it is to become “allergic” to debt. Debt, she argues, traps you in the past as you’re using today’s earnings to pay for yesterday’s expenditure. And considering our alarmingly high indebtedness, South Africans urgently need to start normalising conversations about debt, what it’s costing them, how it makes them feel and how it's impacting on their lives.
Rejecting debt outright is, of course, easier said than done. We’ve all had to resort to using credit when the washing machine gives up the ghost, or the stove is on its last legs. But now, more than ever, it’s time to start looking at alternatives to credit that are less expensive, more flexible and enable us to meet our short-term needs without incurring the burden of debt.
The rental economy
All around the world, the concept of the rental economy is gaining traction as more consumers opt to rent big-ticket items like furniture, appliances and electronics, rather than buying them on hire purchase, taking out a loan or using their credit card budget accounts. This enables them to rent what they need on a month-to-month contract with the option to take ownership after a specified period. They’re even renting clothing for special occasions rather than blowing the budget on outfits they’ll only wear once or twice.
Rooted in the shared economy, characterised by Airbnb and Uber, one of the hottest global trends at the moment is renting and renting-to-own. This is a transactional system that offers access over ownership and provides a lot more flexibility, especially as contracts can be upgraded, downgraded or cancelled at any time without incurring any penalties. And crucially, it takes the risk and cost of debt out of the picture completely.
Now major international brands like Ikea, Banana Republic and H&M are offering items as diverse as fridges, furniture and fashion - as a service, allowing consumers to rent what they need, until they no longer need it or to take ownership after a specified rental period. Unsurprisingly, this is a trend that is catching on in South Africa.
“It makes a lot of sense to rent consumer items rather than to buy them,” says Miller, “especially items like appliances, which wear out and need to be replaced every few years.
This enables consumers to have access to the goods they need and want without making a long term commitment, or ending up in debt.
“We need to start addressing the issue of consumer debt by normalising our conversations about money and then by examining smart ways in which to use it. The good news is that it’s easier to do than we think it is.”
PERSONAL FINANCE