Saving by the bucket-load

As devastating as the drought in the Western Cape is, there is no doubt that it has resulted in fundamentally changed human behaviour which has, in many instances, positively impacted the water management of private citizens. There is nothing quite like a shortage of something as precious as water to elicit a radical change in behaviour proving that, although we may be creatures of habit, we are perfectly capable of learning new and better habits when forced to do so.

Our water-saving journey over the past 24 months has led me to reconsider our attitude towards saving, and how our water-saving techniques could well be applied to our personal money management. Collectively, we have put an enormous effort into saving increased quantities of water every month demonstrating that, even when we thought we could not save any more, we could – and we continue to do so. Our water-saving strategies have some analogous overlays to our money-saving habits:

Knowing where it’s going

Until the drought, many of us had very little awareness of the exact nature of our water consumption and how much water appliances such as dishwashers and washing machines actually used. The implementation of water restrictions caused many of us to analyse the water consumption of the various wash cycles, how often we did washing, how long it took for the hot water to reach the shower, and how many toilet flushes we effected on any given day. We all undoubtedly found some surprises in our water usage which prompted behaviour change.

Similarly, knowing where our money goes to every month should be the starting point of our money-saving journey. Keeping track of our expenses, particularly inconspicuous items such as on-the-fly purchases, bank charges and automated subscriptions, will arm us with a powerful logbook of where our money is being directed every month.

Checking the statements

Pre-drought, our water bill was nothing more than a line item in our monthly budget and was never analysed in too much detail – a reactive and inefficient way of managing anything. Water restrictions (and the associated threat of penalties) have forced us to pay closer attention to our monthly water statement, checking it against our water metre readings and previous statements. The result is that we now fully understand the billing system, how our water metre works, exactly how much we are paying for services, and can easily pick up if anything looks awry.

Our bank and credit card statements deserve the very same scrutiny if we are serious about saving for the future. Retail and bank accounts are not immune to errors, over-charging and ‘fee-creep’, and we would do well to check these more regularly. Every drop counts, and every penny does, too.

Stopping the leaks

Armed with a better understanding of our water consumption and how we are being billed, our next step was to stop the leaks – the dripping tap, the ill-fitting plug and the running cistern. This prompted me to look for the ‘dripping taps’ in our budget and to plug the leaks. Going forward, however, it makes more sense for us to do proactive maintenance to our budget so as to prevent dripping taps from happening in the first place.

Using less

Consider our 87 litres per person per day as our family’s net income. We will be penalised for using more than what has been allocated to us and it is in our best interests to use less than what we are restricted to. So, too, should our spending remain within the boundaries of what we earn, failing which we will be penalised in the form of high interest rates and the unpleasant burden of debt.

Recycling and reusing

The drought has created a new appreciation for the number of times water can be re-used and recycled, and as a family we have learnt valuable financial lessons from this. In this ‘throw-away’ generation where it is easier to replace than repair, we have become more conscious of how items can be repurposed and re-used to not only reduce costs, but to be kinder to the world we live in.

Saving

Water scarcity has given rise to a more determined drive towards saving and storing water. Being more conscious of the need to save water, we have thought out and implemented innovative water storage solutions in our homes and places of work. In doing so, we have maximised water-storing efficiency and massively reduced consumption.

It lies within us all to be more intentional and creative when it comes to saving for our futures. When pressed, and with some creative thought, we should be able to find savings capacity within our budgets.

Harvesting

Harvesting our own water reduces our dependence on the municipal water supply and spreads the risk against either of the supplies running out. Expanding on this analogy, creating alternative sources of income (specifically passive or annuity income) reduces the household’s dependency on a single source of income and alleviates financial pressure. A passive income provides for breathing-room and can terminate the cycle of living from pay-cheque to pay-cheque.

Planning for the future

Never before have we had to think about where next month’s supply of water will come from. With the dam levels rising only 0.3% this past week in what is historically the fourth wettest month in the Western Cape, we are now starting to plan seriously for Day Zero. In the context of our retirement planning, what is our Day Zero? How long will our money last? When will it run out?

Prioritising

Restricted to a daily limit of water, we have learnt the art of prioritising our water consumption. Naturally, drinking and cooking take priority, followed by personal hygiene and ablutions. Thereafter, we have to prioritise accordingly. In a world of infinite choice, the drought has proffered valuable lessons in identifying what is important to us and making informed choices. The same principles apply to the way in which we prioritise our spend, making carefully considered purchases that align with our goals.

Staying educated

If nothing else, the drought has been a catalyst for increased education and awareness for weather patterns, climate change and water treatment options. We are all the better for knowing where our water is stored, how it reaches us and the future options available to address the crisis. With most South Africans being under-funded for retirement, there has never been a greater need for investor education as a way of addressing the savings crisis we face.

Nature has many valuable lessons to teach us, least of which is that we can change our behaviour and form new habits that are friendlier to our goals. We can adapt, create and innovate to ensure better outcomes in times of crisis. We can be robust, resilient and resourceful in times of scarcity.

Have a wonderful Thursday.

Sue

Like water, a well-funded retirement is a precious commodity.



Categories: Financial Planning

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