Are you a Payday Millionaire?
03 August 2016
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On mobile, on digital, on demand, this is Old Mutual Live, the Money Coach edition. Hello and welcome, my name is Chris Gibbons. With me in the Old Mutual Live studio is John Manyike, Head of Financial Education at Old Mutual. John welcome, good to have you with us.
John Manyike: Thank you Chris, thanks for having me.
CG: We’ve all seen it I’m sure, it’s the end of the month, the wages have arrive, hoorah. The salary has been paid, yes. Suddenly it’s party time, living the high life, spend-spend-spend. Then not a week later, pockets are empty. In this edition of Old Mutual Live Money Coach we’re going to be looking at how to avoid being a payday millionaire. John, what exactly is a payday millionaire?
JM: A payday millionaire are people who fall prey to unplanned spending on payday or just in the beginning of the month. But they have no money left to live for the rest of the month or having to wait for the next payday is quite a daunting task.
How prevalent is the problem?
CG: How prevalent is the problem?
JM: The problem is quite common in South Africa, especially on paydays. You see a lot of food outlets and restaurants, long queues of people buying food and all that. A lot of them, I believe, are unplanned spending in the beginning of the month. A few days’ later people realise, oops, they have to pay their debts. They also need to do groceries.
By that time you find that there isn’t money left. Others, of course, the first place to go is a pub somewhere close to work. Having sometimes, they call it Sheila’s Day and unfortunately they’re already out of budget. Because there was that unplanned spending on payday or immediately after being paid.
CG: You talk about the pub, I’ll tell you a story about my own personal family. My family’s origins on my father’s side lie in a very poor part of the North East of England, real working class area. When my father was growing up, the women would wait at the gates of the factories or the ship yards, on a Friday evening, to catch their husbands before their husbands could get to the pub and drink it all away. Is that a solution? Do you just hand it all over to your wife?
JM: I suppose different strokes for different folks. Some men do have trust issues with leaving the money, not only with the wife, but also maybe with family members. I think we have to look at what are ways of avoiding being a payday millionaire.
Strategies to NOT fall into the trap
CG: What are the strategies, what are the solutions?
JM: If you want to avoid being a payday millionaire or you’ve got money only on payday, let’s take for example people who get paid on the 25th of the month. First of the month, no more money and they have to wait for the 25th of the new month.
One, you need to analyse what causes you to be a payday millionaire. What are you spending your money on, things that you’re spending unnecessarily? Is it the traditional payday family meal that busts your budget or is it the six-pack that we get from the local bottle store immediately after payday. You need to really analyse that, that’s the first one.
Secondly, you need to make sure that you have a budget and stick to that budget. You need to make some adjustments. When it comes to shopping, that’s number three. You need to shop with a list, if it’s not on the list, don’t buy it. Otherwise you’re going to find yourself in big trouble.
I know sometimes people get tempted to buy specials and so on, but you need to be very prudent when you make that decision. You might want to consider doing a weekly shopping as opposed to monthly shopping and just break down whatever your monthly budget is and doing it weekly. If you’re a payday millionaire and see how that works for you.
In some instances, if you prefer to do monthly bulk shopping, try to do it in the middle of the month. If you can, try different things. But I think the last one that I really like so much is about trying to live your life in reverse if you’re a payday millionaire.
What usually happens is you know that the last week of the month, you’ve got your survival tricks that you apply to survive until payday. Why don’t you try and mimic your last week of the month and live your life in reverse. The first week of the month, after payday, you know you’ve got money, try and mimic the last week of the month and see how that works for you and get your life back.
CG: We’re going to do a separate episode on Old Mutual Live Money Coach on loan sharks, but sometimes on Friday, it’s not the wife that’s waiting at the factory gate. It’s two very big gentlemen who want a quiet word with you and they seem to have lost their sense of humour –
JM: With a baseball bat.
CG: As you say, with a baseball bat, how do you deal with that?
JM: You know, it’s just to avoid them. Rather plan your finances, avoid going into debt, avoid borrowing. But we’ll deal with that in another episode.
CG: You’re listening to Old Mutual Live, the Money Coach edition on demand, visit dogreatthings.co.za. John, let’s just recap quickly. How do I stop being a payday millionaire, what are the key things to remember?
The buck stops here!
JM: Firstly, we said you need to analyse what causes you to spend unnecessarily. Number two, we said shop with a list, if it’s not on the list, don’t buy it. Three, we said to consider doing a weekly instead of monthly shopping. In that way you might also benefit from specials, try things differently. Number four, we said if you prefer doing monthly bulk shopping, try to do it in the middle of the month. See what happens because that might change your cycle of being a payday millionaire.
Number five is, try and live the month in reverse. If the last week before payday is difficult, except for your fixed expenses that must be paid in the beginning of the month. Try and mimic the last week of the month, spending in the first week of the month, while you still have the money and progress from there.
CG: This has been another edition of Old Mutual Live, the Money Coach edition. My name is Chris Gibbons, with me in the studio has been John Manyike, Head of Financial Education at Old Mutual. John, if the listeners want more information where would they go?
JM: They can join our digital community on Facebook by liking our page, which is On the Money Financial Education Programme or follow us on Twitter @OM_OnTheMoney. You can also do an online course which you can access on www.omonthemoney.coza.
CG: Get in touch any time, if you have any questions for either John or me, or topics you’d like us to cover on Old Mutual Live Money Coach. Please feel free to send them direct to me at email@example.com, we would be delighted to hear from you. Old Mutual Live, on mobile, on digital, on demand.