Ever wondered how a family on a small income can afford a “massive fucking tv”? That’s a quote from Jamie Oliver by the way! It’s easy looking from the outside in to assume that being on a low income means that you shouldn’t or can’t have the trappings of a modern lifestyle.
The Savings Trap
Being on a low income traps you into not being able to save on a large scale. As soon as there is a sum saved there is always, always a bill to be paid or an emergency that uses it up. It’s easier to pay over a small amount on a weekly or monthly basis towards a bill than it is to have to worry that you might not have the cash in the bank when it comes due.
Every year brings new annual high costs that have to be paid. Insurance? You can pay that on a monthly direct debit, providing you agree to pay the interest. Clothes? Mail order catalogues with credit/finance options are the way to go. There are a few older shops that still offer savings books. In my local town the draper offers a weekly saving book. they’re the only retailer in the town that sells school uniforms for all the schools in the area. There’s no interest here, just save in advance of September and put it towards your back to school bill.
That Big TV & Other Choices
Need a telly? You can rarely buy a second hand tv on the never-never. Besides, when you reach a point where you have to replace the television, would you consider waiting a year or two to save up to get another one? Most people wouldn’t. Why save when you can buy a tv on hire-purchase and pay it back over the next 2+ years, albeit with a high rate of interest? Of course the big tellies are the ones that are available on hire-purchase.
Yesterday I got a message from someone who had heard me talking on The John Murray Show that morning about how the cost of nappies drops dramatically in shops for the week that child benefit is paid out. They suggested that I consider cloth nappies because they work out cheaper in the long run. It’s a great idea, if you have the money to make the initial investment in cloth nappies and if you can afford the extra energy required to wash the nappies. The same applies to many other choices you have to make when faced with a small newborn to take care of. The shop that offers hire-purchase or a long term savings scheme for the big ticket purchases like a pushchair or a cot will get far more business than those that don’t.
While some people scrape together the money to buy a secondhand car without a finance arrangement, it’s often those on the lower income who will opt for a loan on a newer car. You need to go through a garage or dealer to get this finance in place and they rarely offer a finance option on an old banger. When you’re on a low income banks don’t always offer you a loan for a car so the more expensive, higher interest, finance option is the only way to be able to do this.
Once stuck in this savings trap it’s a slippery slope unless your disposable income increases. You’ll always going to be stuck in a loop of financing the next thing you need to buy or bill you have to pay. It’s hard to get out of and demoralising on a personal level. From the outside you may appear to have all the requirements of a modern life, but on the inside there is a daily toll.