TARIQ A. AL-MAEENA
It is the height of summer. Many families are traveling about, a substantial number on borrowed money. They have fallen into the trap of being “like the Joneses”. It is not difficult to spot some of them as they draw cash out of machines using their credit cards, rather than their ATM, cards. Others can be seen at grocery stores using credit cards to manage their food bills.
While the global economic downturn of recent times has not gone unnoticed and has had its impact regionally to a minor extent, many of us trapped in past habits of spending more than we earn have simply not learned our lessons well. Money management and financial prudence is lacking among many families who run out of funds well before the next paycheck and tide that period over with borrowed funds.
Some of those borrowed funds are occasionally spent on unnecessary items such as vacations or other goods that are long forgotten while the debt is still to be settled. Banks are notorious for snaring customers with the promise of easy money through the facilities provided by credit cards. Unfortunately, many customers lack prudence in their use.
Credit marketing has been growing significantly in the past decade in a region awash with petro-dollars. Unfortunately, it has turned more into an exploitation of most salaried individuals who are lured by quick and easy ways to acquire just about everything, including many items they can do without.
Banks dispatch their representatives to your office door with sign-up forms in the hope of getting you on board, or else you get bombarded by telephone calls from their sales agent. They also seduce you with the concept that you will earn money when you are actually spending it. In their quest to sign up anybody with a monthly income, our banks and lending institutions may have failed to serve regional societies in a responsible manner.
Our society operated for decades under the “pay as you play” concept. If you didn’t have the money, then you either had to forget about it or else set aside something monthly until you collected the full balance before you could acquire the goods. Or you had to gather up enough courage to borrow from a family member, and you had to have a good reason for doing so. There was no easy money for quick access to material things that in some cases were not a necessity.
But in competing with the rest of the world, our lenders have in recent years made it possible for one to practically pawn his future for all things desirable. Credit is well and good if used wisely. But the growing number of those complaining of the monthly credit squeeze indicates that “easy money” is taking its toll.
And it’s not just banks. Almost any major retail establishment you visit has set up or contracted credit facilitating agencies to ensure that you do not leave their store without purchasing something, and again it is often stuff you really could do without.
What makes it more alarming is that credit issues and defaults are on the rise and are garnering social awareness. With most parents themselves caught in the debt-trap, one would have thought that the hope for their young in understanding and respecting fiscal discretion could be found in schools.
And yet our educational institutions do not seem to be aware of the urgent need to prepare young people in this country to be credit savvy. How much financial prudence is a child exposed to as he goes through his school years? There are no classes in our school curriculum that I know of that help children understand the value of simple budgeting.
In some countries, companies offer credit management counseling to debt-strapped families and help those in the credit crunch work themselves out of it for a small fee. With such businesses lacking here, it is often left to the heads of households to face their demons and that takes a toll on the structure of the family.
If there is any lesson to be learned, it is that in our desire to play today, we should make certain that we do so with our own money. Otherwise we are going to be in for a long and unpleasant ride tomorrow.