These are difficult time for many families as we cope with the economic recession. Baptist Savings (formerly BSDS) offers a few tips on making your money go further.
The Great Depression is probably the most severe economic downturn ever to hit the world, but from its history and how people coped we can take some common sense financial advice.
It is true the world has changed, but fundamental pearls of wisdom remain sound. Remember the old Chinese proverb, “To know the road ahead, ask those coming back.”
Probably the biggest lesson from the Great Depression is that people didn’t have credit cards or an easy means to access credit and the burden of debt. They had to live within their means.
Do this simple exercise: Find out the various interest rates you’re paying on your debts. Then calculate how much cash in interest your debts are costing you. Remember that all you’re doing is pouring hard earned cash into somebody else’s pockets.
There is a story from the Great Depression about how many housewives would keep a row of jam jars on the windowsill. Each jar had a label – example, food, rent, emergencies – and as money became available, mum would put it in the jars according to their needs.
There are a couple of good saving and budgeting lessons we can take from this.
1. Use cash rather than Eftpos as much as possible. For one, you always know how much money you have and you can’t go into overdraft. It avoids penalties, overdraft fees and, in some instances, it saves you on bank fees.
When you use Eftpos or any other kind of electronic money transaction, you don’t notice what you’re spending. But when you’re counting out the 20 dollar bills you literally feel the cost of something.
2. Use different accounts or envelopes – like the jam jars – to apportion your money according to your needs. For example, you may have a separate account for fixed expenses like power and insurances.
Sometimes, because you’re using plastic, something you do eats into the power money (just a little). But it may be enough for the bank to charge you an overdraft fee or even decline the debit and charge you penalties. It’s a mistake that could cost you $25 or more.
This practice also lets you put aside a little bit, sometimes even just the spare change, for items like clothing or a coffee with friends. It teaches good saving habits because it’s about putting money away towards small, specific and tangible goals.
3. Start a savings account. If you put just 1% of your income into a savings account, or even the spare change, it doesn’t matter how small it is – at least you’ve made a start. It all adds up in the end.
At the very least, you should have money set aside for when money emergencies crop up – and they will crop up.
4. Review your annual costs such as insurance, power, telephone bills etc. A good management accountant will tell you that a 1% saving in costs is worth more than a 10% increase in sales because it costs money to make money.
5. Reduce your shopping trips and think about teaming up with friends or neighbours to buy in bulk. Supermarkets and malls are designed to get more money off you. Why expose yourself to temptation by making frequent trips to the mall?
Use a shopping list and when you reach the cash register and find that you’ve gone overboard, put the luxuries back rather than going just that little bit over.
By pooling your money together with neighbours, friends or family you can afford to buy in bulk which is cheaper reduces trips to the supermarket.
6. Practise substitution. Make your own bread and grow your own vegetables (plant boxes are good for this if your space is limited). Take the time you save on trips to the supermarket and start building yourself a little garden.
Concentrate on those vegetables you use regularly but that fluctuate in price according to the season.
7. Don’t carry stuff in your car you don’t need. By emptying any surplus weight in your car you can save on petrol. Remember, any weight in your car costs money to transport because it uses up more energy.
Finally, remember this piece of sage Great Depression advice: “Count the cents, and the dollars will take care of themselves.”
• Baptist Savings provides a safe investment for Christians who want to earn a competitive return on their savings, while helping to fund the building of Baptist churches and community centres in New Zealand. See
www.baptistsavings.co.nz for more information.