The One Rand Family project followed the experience of a relatively well-off family living on cash only ‒ in fact R1 coins ‒ for a month.

If you haven’t followed the trials and tribulations of the One Rand Family aired on e.tv during July, it’s really worth catching it on YouTube or the One Rand Family website.

The project, sponsored by Sanlam, followed the experience of a relatively well-off family living on cash only ‒ in fact R1 coins ‒ for a month. The family’s income was paid out in R1 coins which were put into Tupperwares or “skhaf’tins”.

The series has resonated with many South African families who realise that they are not alone when it comes to trying to figure out where all the money went during the month!

I was fortunate to be involved in the project from the beginning and spent some time analysing the family’s budget and spending patterns. Their financial story is a mirror of the average South African household.

Not knowing the real cost of living

Before the show started, the family was asked to write down their budget. At first look, it seemed as if they were coming out each month – but only just. However, a closer look showed that they had left many expenses off the list. This highlighted that the family had never put a budget together before, nor had any real idea of where their spending went each month.

As Londi, the mom, admitted, she just swipes her card without even thinking about whether she can afford it. It was clear from the beginning that they were in for a nasty shock when their money ran out before the month did. In the final week they were forced to borrow money from the producers of the show to meet the BMW repayment. This made them realise that despite well-paid jobs, they were relying on credit each month to survive.

Having more debt than savings

The family faced a real shock when all their money was put into piles and they realised that their credit card repayments were equal to their pension contributions. And that’s just the credit card ‒ we’re not even talking about the monthly mortgage and car repayments. The family is spending more money paying the bank interest than they are contributing to their future. In this scenario it is impossible to grow wealth – in fact they are contributing to the wealth of the banks’ shareholders at the cost of their own financial security.

Their cars!

Nearly half of Londi’s take-home pay goes to repay her car. When both of the couple’s car payments plus insurances and petrol were put together, it made up half of their household income. While Londi justifies her car in terms of “status” and making her feel good, the reality is that they simply cannot afford their cars and it is having a major impact on their ability to grow real long-term wealth. In the last episode the family realised that they are living one car payment in the red each month.

No communication

In the beginning Sbu, the husband, believes his wife is responsible with money and thinks before she spends. Londi admits that this is nowhere near the truth and that she often hides her purchases, but she believes that Sbu is good with money.

In the end they both had to realise that each of them had to take responsibility for the finances in the household and hold each other accountable. In order to improve your financial situation, both spouses have to be committed to the process and take collective responsibility for the family’s financial future.

Cards can be dangerous

When you have a piece of plastic that allows you to buy stuff without really knowing if you are spending your money or the bank’s, it is very easy to get into debt. As clinical psychologist Rafiq Lockhat explains, credit cards were designed by psychologists to make you spend money you don’t see.

When the family goes on holiday to Durban they realise that they spent half what they normally do by using cash and not their cards.

Awareness brings change

With a limited number of coins and no credit cards to fall back on, the family had to start making every R1 count.

When faced with a limited budget when grocery shopping, Londi started actually looking at the prices on the shelves for the first time and makingg more informed buying decisions.

The family found less expensive ways to entertain visiting family and friends – and discovered the joy of the simple pleasures in life.

From thinking about cars as a status symbol, they started seeing them as “a lot of skhaf’tins” and in the end, for a woman who once lived for her credit card, Londi took the dramatic step of cutting up her credit card, with the full support of her family.

Change is possible but it starts with awareness.