How to show resilience when times get tough
08 October 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 for having me.
CG: Times are tough right now, prices rising faster than wages, therefore we need to be tough, we need to hang in there. So, in this edition of Old Mutual Live Money Coach, we’re going to be looking at how to be resilient in tough economic conditions. John, let’s start with the kind of pressures which ordinary consumers are facing.
JM: So, if we talk about the rising cost of living, we’re referring to stuff like the rising cost of petrol. Because a lot of people use their own cars to go to work. Those who use public transport, a lot of times when the sustained increases, you’ll find they’ll pass it on to the consumer. We’re looking at that and secondly, food inflation is certainly another issue.
The impact of earnings not matching inflation
CG: Food’s a monster at the moment isn’t it?
JM: Absolutely, we’re now beginning to feel the effects of the drought that we experienced last year, with some of the producers telling us, they’re going to have to put up their prices. Unfortunately the poor are actually the hardest hit because it’s not like their income is increasing. So if the wages are not increasing, at the same rate that there’s food inflation, it’s certainly going to become a challenge for many people.
Then generally, the cost of living is quite a challenge, it’s not only in terms of food, but even the rising cost of education. A lot of parents want to see their children going to school and learning and preparing for a brighter future. But it actually costs money to take children through school. There’s a rising cost of education as well, looking at stationery, uniforms, things that are unavoidable.
CG: What do you recommend, how should we be responding to these pressures? How do we develop resilience and let’s be clear, what do we mean when we use that word ‘resilience?’
How to start being resilient
JM: If you talk about being resilient, it’s about the ability to recover quickly, from a very tough economic condition or the ability to recover from a shock. It means you need to be buoyant, you need to be agile, being able to live, even with the same level of resources that you have.
CG: Do we develop resilience, the way a soccer player develops stamina, like lots of hard practice?
JM: Absolutely, practice makes perfect. It’s not going to happen overnight because it means it’s a life adjustment and very often it’s not easy. If you’re asking your kids to adjust in a lifestyle, it’s not easy for them, as much as it’s not easy for the elders. If you’re used to indulging your children and you go to movies and all of a sudden you say no, suddenly we’re going to have to be watching TV at home. We can’t afford that, so it requires a lot of adjustment.
CG: Let’s be clear, this involves resilience, it involves every member of the family.
JM: Absolutely, because parents cannot do it alone, but even if they make changes, you have to make sure that the family, the entire family understand why you need to make those changes, especially children.
CG: What are the key things that need to change?
JM: A couple of things I would recommend. One is that people need to rationalise their needs and wants. You need to decide, what is a need and what is a want. What are the things we can do without and secondly, it means you need to exercise a lot of discipline, in terms of being able to live within your means? You can’t compete with your friends or neighbours, you have to live within your means. But in some instances it might mean having to divorce certain brands which are not cheap.
If you’re used to buying a specific brand, in terms of groceries and stuff, you might need to review that. If I can get a similar product that does the same thing, does it really matter? Does it really have to be that particular brand? In tough economic conditions, you really need to start looking at those things. But also, it means shopping wisely. There’s lots of things we can talk about when it comes to shopping where you can use the same Rand to actually have more goods in your trolley.
CG: You’re listening to Old Mutual Live, the Money Coach edition, on demand, visit dogreatthings.co.za. John, let’s sum up, what are the key things we need to remember when it comes to developing resilience?
JM: Developing resilience means also that you really need to find ways to be able to survive, through tough economic conditions. By simply rationalising your needs and wants, being disciplined with your spending, living within your means. Deciding whether you want to stick to specific brands or whether you want to settle for similar products that can do the same thing. Those are some of the things that in a nutshell, it means a lifestyle change.
CG: And once again, it involves the whole family.
CG: This has been another edition of Old Mutual Live, the Money Coach edition. My name is Chris Gibbons and with me in the Money Coach 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 On the Money digital community on Twitter, they’ll find us at @OM_OnTheMoney, on Facebook they can like us on On the Money Financial Education Programme.
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’d be delighted to hear from you. Until the next time, thanks for listening, Old Mutual Live, on mobile, on digital, on demand.