Living beneath your means is a mantra we often hear for maintaining a healthy financial statement, and living your life without massive financial stress. Some tout it as the first step to wealth creation, and saving for investments, or your business, or any other money generating project that requires capital. Living well beneath your means is the gold standard for good financial management.

For Zimbabweans however, this mantra takes a whole new meaning. There are no credit lines from banks to draw on when cash runs out, unlike in more economically developed countries. Here, unless you apply for a loan, you can only spend money that you have physically deposited yourself, or that has been transferred to your account. This means you can’t afford to run out of cash either in the bank, or in your wallet.

A great deal of Zimbabweans have turned to micro-finance institutions, which have steep interest rates, but demand that you meet less stringent requirements than banks do. Even more Zimbabweans, however, have turned to illegal loan sharks, who will have less requirements than micro-finance institutions. Unfortunately, this practise can be dangerous, as loan sharks are not known to use legal or non-harmful methods to extract the debts owed to them. Which means it’s really not safe or advisable to turn to loan sharks.

This leaves very few options for the regular Zimbabwean, but one of these, fortunately is quite achievable: living below your means. This method is obviously not a “fix all” for all (not rich) Zimbabweans but it is achievable. There are many reasons to living below your means, but in Zimbabwe, here are two of the most pressing ones.

Sudden and unexpected price hikes

The practise by responsible authorities (the government to be specific) of raising prices and introducing new policies without warning triples the uncertainty associated with living in Zimbabwe. The fuel price hikes that were announced by the president a few weeks ago in the dead of the night, are a perfect example. It wasn’t month-end (when most people receive their salaries) and there was no prior official warning (understandably), which means the vast majority of affected Zimbabweans were unprepared for it.

Realizing that your budget for the month, is suddenly grossly insufficient can be incredibly stressful for most people, especially those with dependants. Driving your car has become too expensive, and before the re-introduction of buses, using omnibuses was equally expensive.

Living well beneath your means, allows you to have a stash of cash (or electronic money) readily available for such scenarios. When you’re not stretched to your max, or perhaps even way above your means, you can get creative with the funds that are still available to you.

Rate fluctuation on the parallel market

The government continues to insist that the rate between the US dollar and RTGS balances is at 1:1 but the reality on the ground is quite different. The parallel market (and the new price of fuel) tells a different story. The unofficial rate has been at 1: 3.5 for a prolonged period, but sometimes fluctuates between 1:2.7 and 1:4. More often than not, it goes up, instead of down. These fluctuations mean the cost of living in Zimbabwe has been steadily rising, with no sign of slowing down.

Living well beneath your means gives you a better chance of withstanding this steady rise. Because you have left over money, you could use it to create a new source of income, to increase your budget. This means you may be able to still afford purchasing all your basic needs in this hostile economy.

Instability of the financial sector

The state of our financial sector is perhaps the most worrying of all for most Zimbabweans (especially those without off-shore accounts). The possibility of it collapsing again is a spectre floating above our heads. We could lose all our monies (considering that RTGS balances are apparently bloated) overnight, just like people did in 2008 when the government scrapped the pseudo local currency we were using.

Striving hard to save money on the side, in hard forex, could eventually save you when and if disaster strikes again. The little nest egg created could provide some sort of buffer against even harder times to come. But in order to do this, you need to live below your means, enabling you to save some money.

End note

Living in Zimbabwe can be an extreme sport for a lot of Zimbabweans, therefore it is imperative that we do all that we can to improve our chances of survival, and one of those things, is living beneath our means.