Coined for effect
In my book, "Dealing with the little leaks that keep you poor," I explained some of the things we take for granted and yet are critical to financial sustainability.
Take the case of excessive borrowing for example. When you have a good credit score and a source of regular income, chances are, you may qualify for a credit facility from a credible, regulated financial institution. However, if you get carried away by your creditworthiness and go about borrowing from multiple institutions, you may overextend yourself to the point where repaying the loan and the applied interest would become a problem.
You notice, when at that point of financial distress, that the little loans here and there have now become the source of a big problem- financial worry. You become enslaved to debt in that process as you will be working just to service your debts.
This is just one example. Other examples include becoming spending-happy. I treat spending-happy to be beyond impulse-buying; this is the point that you are just happy buying things, and in most cases things that you don’t really need.
You end up pilling up several clothes and other items in the bedroom, kitchen and storerooms yet you never have the need to use them.
In fact, a test of your habit in this direction is to assess the number of times you have bought items to specification and desire and yet just get sad about it when you get home and realise you don’t need them. Perhaps a better option was even available at home. These habits will keep you poor, if they go unchecked.
With all that stated, I want to look at another area of the little leaks that keep us poor, but this was not captured in detail in the book!
So you heard it here first. Here, l am looking at the need for you to keep an eye on the “small change”, I mean the “coins”. I am looking at the analogy of coins from one angle- a marketing perspective- but will be using two extreme examples to explain.
I am sure you may be wondering about the choice of this topic at this time. To keep you in sharp focus, let me tell you the backstory first.
A few weeks ago, while on my usual trip from work to the house, l had an encounter with one of those “volunteers” who stand by the roadside and offer to clean car windscreens. After offering a “helping hand” by cleaning your windscreen, ostensibly to improve visibility, they walk to the car for a few coins.
They don’t ask for much, just some coins! And in my case too, it was the same strategy—a quick wash, and gaze at you, the driver, and a leisurely walk to your side of the car to seek your support.
Last week too, l had a similar encounter, but this time around though, the “volunteer” did not wait for a voluntary offer from me, but just asked: “Some coins for the boys”. I did give some coins to the boys, per the “command.”
Now, this is my take. I have observed that in most societies, even though both notes and coins have monetary value, because coins normally do not have a high monetary value, they are not respected.
Granted that over time it became clear that as transaction values increased it became practically impossible to carry bags of coins around—but they are still relevant to counting in units.
Those on the road cleaning car windscreens to make a living are very much aware that if they ask for notes, you may refuse to give them money so they use “coins” to appeal to you.
In your mind, coins do not have much value and therefore you are ready to give them away; the same way they also feel that the coin is small in monetary value so you will give.
In fact, people easily give away coins or refuse to take their change at the teller when checking out after shopping. That attitude is actually taking money away from you; a little leak that can keep you poor.
If, for example, you had a small savings box at home in which you kept all the coins you got back after shopping, over a period, this would become notes of high value, literally, as you can take the accumulated coins to your bank and exchange them for banknotes.
The other thing is that when traders realise that consumers are generally not interested in coins (the small units), they normally round-off the price of their products to the nearest banknote.
The traders often start with “no change” after a purchase, and when they notice that there is no complaint, the next time you visit that same trader the price is to the nearest banknote denomination.
This is the reality of the day. This time around, you have not refused to take your change but the trader has altered his or her price due to consumer behaviour. The downside of the traders’ action is that it leads to an eventual increase in price, which affects the general price level in an economy.
Inflated prices lead to increase in the consumer price index, often described as inflation. So when the coins are highly accepted and used freely, it also moderates the rate of increase in the general price level also. Before l go to my next point, let me just add at this point that l am not suggesting that the coins that you give the “volunteers” should not be given.
Rather, l am using the way their understanding of the coin market has made them good marketers in their trade. Your understanding of it too, by keeping a container for your coins, will also give you notes at some point in time.
Now, this is the other example that l want to use- a high level marketing strategy. Have you ever noticed how in some retail shops you often see prices stated as, say, $60.99 and not $70.00?
The price, $60.99 is only $0.01 short of $70 but because of the way the price is quoted, psychologically, the impression created is that you are paying something in the sixties and not the seventies. We go for it!
So the pennies actually help to avoid or make a payment for something because on one hand a penny difference may make you think of an item as less expensive.
The irony is that when we get to the check-out point and we are offered the penny change we often give it out as “tip”. We pay the $70.00 unconsciously, anyway.
To address the little leaks that keep you poor, remember that every penny helps. Using coins has a lot of benefits, not only to you as an individual but also to the country as a whole.
Those with interest in numismatics make the coins and currencies beautiful in many ways. Numismatists know the value of currency not only as a medium of exchange in facilitating trade in goods and services but also the vital role they play in preserving history.
Coins hold significant historical value too, and early historians used coins to represent stories of struggles, triumphs, experiences and culture; they are outstanding sentimental and emotional artefacts that link different generations.
Your coin is not just a metal, as they are coined for greater effect!