Disposable income is a spend-or-save poser
July 1, 2009
 By Ann Crotty
I'm never very sure if, in the sort of recessionary conditions we are facing, I have a patriotic duty to spend or save. The Reserve Bank governor's decision not to reduce interest rates pushes me towards the "don't spend" option.
If the governor is so concerned about inflation that he wants to keep a lid on consumption, then I feel I should do my bit and continue to avoid shops.
But then there's the Keynes school of economics that, simplistically put, would have me consume in order to support economic activity in the face of recessionary conditions. That force is pushing me ever closer to the shopping spree option.
For the past year this has been an entirely theoretical dilemma for me. But as of today I am back at full-time work, which means I will be receiving an income that is considerably above the average in this country - even for a journalist working for a management obsessed with cost cutting.
This in turn means that I will be getting more money than I need to cover my basic requirements, so there is scope for some discretionary spending. (This, I think, should be our secret; I would prefer if it was not shared with my boss.)
Last year I took 12 months leave to study company law at UCT's law school. This seemed like an appropriate move, given the pending introduction of the new Companies Act.
As it happened, it was an excellent move; the course was fascinating and drew on wonderful literature. It gave me a completely new perspective on issues around company law. I will be returning next year and would urge anyone who can to sign up as well.
But I digress. During the 12 months - in keeping with my primary status as a student - my income was a fraction of what it had been and was dependent on my considerably reduced ability, time wise, to file copy to Business Report. The two major challenges in this lifestyle change were coping with the comparative poverty and figuring out how to do exams.
I eventually managed to work out the exam challenge, but the comparative poverty proved not to be a challenge at all. In fact, at the risk of sounding a little corny, there was a delightful sense of empowerment in knowing that I could happily live with considerably less than I had done previously. Delightful because one of my great fears relates to the lifestyle damage employees and savers face as a result of a combination of defined contribution pension funds and investment-market collapse.
After 12 months in Cape Town I realised that post-employment life need not be as bad as the defined contribution pensions and the investment industry would have it.
There were, however, a number of critically important factors that determined the success of my student project. One is that the decision to become poorer was entirely mine, and it was for a specified period. There is absolutely nothing empowering about losing your job or a fortune in a financial meltdown.
It certainly helped to have a few really good, generous friends who are happy to buy you the odd meal; and generous welcoming family and friends who will host you on your dollar-a-day trips overseas.
Also crucial was the Cape Town location; the place is so beautiful that with just enough rands to pay for petrol and a cup of coffee, you can feel utterly spoilt.
Skype, public transport when petrol was ridiculously expensive, restaurants offering winter specials and avoiding shopping malls also helped.
But now comes the burden of having to decide what to do with some discretionary income - spend it à la Keynes or save it à la the governor?
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