Your self worth is determined by your net worth
“A strong sense of self-worth gives us the power to say no to actions that don’t serve us and drives healthy financial habits.”
In the past week I have been reminded how our relationship with ourselves influences our relationship with money. Whilst away in London I was assailed by a series of messages from a very distressed young woman and mother who has got herself into unmanageable debt with informal lenders – the Mashonisa.
What started in January as a well-meaning desire to send her young daughter to a better school moved quickly into wanting to ensure she had the clothes and accessories to ‘fit in’ to the new environment. This quickly escalated into a deep hole as she over-stretched herself financially and became sucked into an uncontrolled borrowing cycle. As her sense of panic and shame increased the money lenders closed in, threatening to come to her home and expose her financial predicament. She was wooed into trying to sustain a middle class lifestyle on a call centre salary and the end result was catastrophic.
The first loan amount was R1000, for which she agreed to repay R1500. When this was not met she took out further loans to repay loans and on and on until the amount owing now exceeds her total annual salary. The young woman is paralysed by fear and by shame. The mashonisa’s know how to use this to emotionally manipulate and blackmail her, taking every cent of her salary and leaving her broke and broken in spirit.
Whilst it will take courage, discipline and assistance from a debt counsellor, with help she will arise from the ashes a stronger woman and mother and learn how to control her finances and her relationship with money.
As you may well know, this is no isolated case. A shockingly high number of South Africans find themselves in this situation. Changes to the lending act have done little to solve irresponsible lending, and the few small gains in the formal lending sector have been lost to the rampant jaws of thousands of loan sharks who prey on the vulnerability of their victims.
What can we learn from this?
In re-reading The Psychology of Money by Morgan Housel, I am reminded that money challenges cut across race, gender and nationality. Whilst loan sharks can more easily prey on the poorly educated, the well-educated and privileged can also succumb to overspending, greed, and ego. What is important is taking action to build resilience against it and help others around us to do the same. The following ABC actions are a good start…
Amplify your self-respect. Identify what makes you feel good about yourself, and what makes you feel bad. Discuss this with your loved ones, or financial coach and do more of what makes you feel good. Strong self-worth leads to strong boundaries. Strong boundaries give us the power to say no to actions that don’t serve us.
Budget. My personal experience when faced with a dire financial situation as a single mother, I discovered that I could cut my grocery bill by almost half if shopping was buying only what was written on the shopping list. Simple Budgeting tools keep spending under control
Commit to financial discipline and don’t waiver from your commitment. Record your spending daily. Set and stick to a spending budget. Cut up your credit and store cards and re-learn to manage with what you have.
Should you have struggles with debt, please reach out to a debt counsellor and get the help you need to work your way back to financial health. Remember that how you feel about yourself (your self worth) drives your financial well-being (your net worth).
