South Africa’s monetary Big Five
08 January 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: Thanks, I’m glad to be here.
CG: Now, everywhere we turn we are bombarded by adverts praising this investment scheme or that financial advisor. They all offer the same promise; hand over your spare cash to us, we’ll make you rich. But shouldn’t we start this process at home, by learning first of all to manage our own money?
In other words, by understanding the basics. That’s why in this edition of Old Mutual Live Money Coach, we’re going to be looking at the Big Five principles of money management. John Manyike, when I hear the phrase Big Five, I think of lions and elephants and buffalo. You can’t surely be talking about the same creatures?
JM: Yes, we are, the very same animals that we find at the back of our bank notes.
CG: You are talking about the same creatures, fantastic. So, what can we learn from these wonderful animals on our bank notes? Are there in fact any lessons to be learnt from them?
JM: Absolutely, and that’s why in the Old Mutual’s On the Money Financial Education Programme we talk about the Big Five secrets of money management. We’ve studied the behavior of each animal on the money and that’s why the programme is called On the Money. We’re able to demonstrate what are the financial lessons or secrets of money management based on the Big Five.
CG: All right, let’s go through them. The lion is the king of the jungle, what’s his secret?
How you can learn from Lions
JM: Absolutely, that’s why the lion is called the king of the jungle because a lot of people don’t know that the male lion doesn’t hunt, it’s the female lion that does the hunting. A disclaimer from Old Mutual, don’t try this at home! The secret of the lion is that the female lion does the hunting, but the male lion eats first. Why does he eat first? The male lion believes that he needs to be strong in order to protect the family and that’s what we need to do with our money.
We need to eat first, we need to pay ourselves first. That means putting money away for future, putting money away for retirement or for children’s education and so on. A lot of people don’t save simply because they want to pay everybody else. If there’s anything left, only then they can save. They find that there isn’t. You need to treat savings as an expense. That’s what we learn from the secret of the lion which you find on the R50 bank note.
CG: That’s the lion, talk to me about the leopard.
Have the long term vision of a Leopard
JM: Now, Chris, the leopard is renowned for its vision, it has a powerful vision. It’s a very patient planner and it never gets distracted from its goal or from its target. Those are all the qualities you need to see from a person who is saving and investing. You need to have a vision about your money, you need to be very patient.
Because investing is not about putting money today and expecting a return tomorrow. You need to be very patient and you need to stick to the game plane. Just like a leopard will stick to the game plan and pursue that particular target. That is the secret of the leopard.
An Elephant may never forget – but we do
CG: The big one, the elephant.
JM: The elephant, as we know, is known for its big memory, that it never forgets. But the challenge with us, as human beings, we don’t have the memory of the elephant, so we can forget. That’s why we need to write things down. Starting with a budget. This is what we learn from the secret of the elephant. You need to write down your budget because a piece of paper never forgets.
CG: And the rhino?
Charge down debt like a Rhino
JM: In the rhino we’re learning to charge down our debts. Because a rhino is known for charging down its biggest threat. Even with us, when it comes to debts, when we say charge down your debt, it simply means; charge down your biggest threat.
Your biggest threat could be that loan with a higher interest. It’s not about the loan with most number of digits, it’s about the loan that has the higher interest. That is your most expensive debt. That’s how your charge down your debt, through the secret of the rhino.
CG: Last and by no means least. What is the secret of the buffalo?
Act like Buffalo when it comes to saving
JM: The buffalo, as we see them, they always move in packs. They grow a big head over time. Again, the strength of the buffalo is in the numbers, it’s in its patience. The buffalo knows that if you grow a big head, they will intimidate creditors like your lions and your leopards and so on. We learn from the secret of the buffalo that you need to pool the resources. That’s what you’re seeing, by virtue of the numbers, it’s about the pooling of resources. That’s why it’s better to save in a pool.
So financial institutions have designed these financial solutions or investments or savings vehicles where you can put money. You earn interest on interest, compound interest, because you’re saving in a pool there. That’s what we’re learning from them. But more importantly, it’s about patience, the patience that the buffalo has. It’s not about timing the market, it’s about the amount of time that you investment spends in the market.
CG: All right, fascinating, the secrets of the Big Five. I understand where you’re going with this, but how do I use it to change my behavior?
JM: The issue is, if a lion has those qualities, we as human beings, we’re super human beings. We are better than animals, we can do better than animals. If a leopard can have a powerful vision, so should we. If you can just apply those secrets or those qualities or those principles, you’re on your way to financial prosperity and creating wealth.
CG: You’re listening to Old Mutual Live, the Money Coach edition, on demand, visit dogreatthings.co.za. John, let’s just recap briefly the Big Five secrets of money management.
Recapping the Big Five secrets
JM: The secret of the lion, pay yourself first, eat first. That is putting money away for future plans, for children’s education and so on, or in retirement. The secret of the leopard is about having a powerful vision, have a financial vision. Make sure it’s written down and make sure it’s backed up by goals and it’s realistic. The secret of the elephant, it’s about writing down a budget and tracking your spending over time. Staying within that budget.
The secret of the rhino, we learn about charging down our debts, so pay your most expensive debts first. Last, but not least, the secret of the buffalo is about numbers, it’s about patience, growing ahead over time. This means when it comes to investments, we need to be very patient when we invest and be disciplined, stay focused.
CG: This has been another edition of Old Mutual Live, the Money Coach edition. My name is Chris Gibbons, 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 about Old Mutual’s On the Money Financial Education Programme, where would they go?
JM: A couple of places where you can find more information about On the Money, let’s start with the online course. So you can self-register for an online course, an On the Money online course on www.omonthemoney.co.za or you can join our digital community on Facebook. Which is On the Money Financial Education Programme or you can follow us on Twitter, which is @OM_OnTheMoney.
CG: That’s it, 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 firstname.lastname@example.org, we’d be delighted to hear from you. Old Mutual Live, on mobile, on digital, on demand.