Could you live well within your means?

Lessons learned from living “R1 at a time”.

JOHANNESBURG – When shopping around for loans and overdrafts, do not accept the maximum credit you are offered. Rather ask: What is the minimum I need?

This is the view of Sanlam’s One Rand Man after three weeks of living “R1 at a time”. As part of a social experiment for National Savings Month, the One Rand Man, a 32-year old architectural consultant from Cape Town, has received his entire salary in R1 coins. His bankcards have been locked in a safe and he is paying his bills from R1 coins he carries around in plastic containers.

The picture below shows how he spends his salary.

Source: Sanlam

Although the idea of the exercise was not to change his lifestyle, but maintain the same spending habits in order to see where the money goes and what happens close to the end of the month, he has been spending less. Living R1 at a time has cut out his impulse buying completely.

“You generally go just to buy beer or milk and you come back with pillows, slippers and maybe a top that you bought at Edgars or something. And it cuts out that impulse buying completely because you don’t want to stand in the queues and count out all the money.”

With around two more weeks to go till the end of the month the One Rand Man says he is looking a lot closer at what he buys when going grocery shopping, he compares prices and buys items that are on special.

Source: Sanlam

In episode three, which can be seen in the YouTube video clip below, he pays his big ticket items – including his car, rent and overdraft facilities – only to be left with three plastic containers.

He says while he is looking forward to getting his cards back, just for its convenience, he will definitely in future weigh his options before taking out loans or buying a new car.

“I know that every little bit helps.”

Consumers often succumb to the impulse to take out a loan for R10 000 when all they actually need is R7 000, he says.

But when you start thinking about what you actually have to pay back and the impact it will have on your quality of life in time, it makes you think twice about your decisions, he says.


Commenting on the project, Arthur Kamp, Sanlam Investments economist, says many consumers are out of touch with their money.

“There we have a guy who is paying off far more on his motor vehicle than he is putting away for his pension and long-term security.”

Kamp says the best way to have a healthier relationship with your money is to understand that it is not just something that you can use to buy goods and services, but that can be saved.

He says it is also important to understand that a credit card is not cash, but someone else’s money that will need to be repaid, most likely with interest.

One of the key lessons from the One Rand Man project is the power of budgeting, he says.

“It is understanding how much money you are getting in and understanding exactly where all of that money is going.”

Not trying to keep up

While living well within your means (for example buying a car of R200 000 when your budget shows that you might just be able to afford one of R300 000 – and investing the difference) might not be the easy thing to do, the benefits can be significant.

It allows you some room to maneuver when something unexpected happens – like losing your job or being hit with an unforeseen expense. Investing small amounts each month (the difference between the monthly instalment of a R300 000 car and a R200 000 car is around R2 000, depending on the interest rate, finance term and deposit) can go a long way in contributing to your children’s education or your retirement.

A debt counsellor recently said where consumers are trapped in a debt spiral it is almost always a case of an unexpected event that broke the camel’s back. Since these consumers were already spending every cent they had (and using credit facilities) there was no room to absorb another shock.

For the One Rand Man, the question now is whether three plastic containers of R1 coins will be enough to see him through till the end of the month?


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