Economics and management seem totally irrelevant to the rank-
and-file
citizen. Most people do not feel they manage anything at all
and as
a result think they have no need to acquire such skills or
even to
take any interest in this topic.
The truth is that we are all managers in some way. Taking
care
of a household is based on the same principle as supervising
the economy
of an entire country, but of course it is on a much smaller
scale.
Parents are in charge of regulating their home's income and
expenses
in a more profound way than economic experts whose only
interest is
dry numbers.
Life is just like economics: There are greater experts and
lesser
ones; those who succeed more and those who succeed less.
Nevertheless,
everyone agrees that reality requires in all areas, that one
be well-acquainted
with the project he or she is handling. Everyone should at
least learn
the basic economic principles that enable him to balance his
budget.
This article was written at the request of a gemach
manager.
He claims that many couples, especially newlyweds, find
themselves
facing daily life without knowing how to make ends meet.
Simple matters
such as expenses versus income, standards of living
appropriate to
one's financial assets, short and long term planning -- are
all
unknown concepts to them. Of course this situation is not due
to a
lack of intelligence but rather because of a lack of parental
responsibility.
They have been spoiled and accustomed to other people
correcting their
mistakes and smoothing out their failures.
When a person starts a business or prepares to supervise his
home's finances he must first check what capital is at his
disposal:
How much is needed for developing the budding business and
how much
is needed to keep it going.
"Some couples, perhaps because of sheer naivete, start off
their life on a foolhardy buying binge, without any
consideration
whether what they are buying is worthwhile or way above their
means,
without any plan or guidelines. In their early married years
they
already encounter overwhelming financial difficulties," says
this
gemach manager.
"When a young man comes to me with an application for a loan,
he usually does not inform me of the scope of his other
debts,"
the gemach manager told me. "A tiny notch of one
specific
loan is, however, enough for me to understand how that person
conducts
his life. Since gemach managers now consult with each
other
about problematic cases, we know exactly how the applicant
gets along
in life. What we see is not faulty management -- but a total
lack
of management. It is as if there is no connection between
what
you have and what you spend. It is as if the only possible
expense
in writing a check is the pen's ink to write down the
deferred dates
and figures. That also is often unnecessary since the debtor
sometimes
even borrows the gemach manager's pen!
"In many cases parental help covers their young children's
debts, but there are instances in which the parents
themselves are
over their heads in debt. At this point the real tragedies
occur.
The young couple have nowhere to turn. Individuals are not
overjoyed,
to say the least, to lend them money because of the
reasonable fear
that their money will never be returned. The only address
left for
them is the gemach. These free loan services are,
however,
filled to the brim with applications from people marrying off
their
children, and are not really geared to helping a young man
not yet
dry behind the ears and already deep in dept.
"When such cases come to me I stop being a gemach
manager and turn into a financial advisor and sometimes even
a family
counselor. I am careful not to bawl out the young man despite
the
urge to do so. I just simply sit with him for half an hour,
figure
out with him his income from the kollel, his wife's
income,
and even parental financial support. The next step is to sum
up his
monthly expenses such as electricity, water, telephone,
taxes, transportation
costs, trips, food, and clothing. I show him the sum that he
is more
or less able to spend freely. Together with him I try to find
ways
to limit his expenses: What he should under no circumstance
buy (a
car for instance, even a used one, since although the initial
cost
may be low the upkeep is sky high). It is necessary to point
out to
him where the pitfalls are (e.g., credit cards) and how he
can increase
his income. When the young man succeeds in holding the
steering wheel
correctly, I start encouraging him to save, to put something
aside
for a rainy day when he will desperately need some money.
"Some who initially get entangled in debts come to their
senses and start running their home correctly. There are
those, Hashem
yeracheim, who sink even deeper into debt. This can be
because
of their inability to emerge from the whirlpool into which
they were
sucked. In more severe cases they had been helped out of
their calamity
by their parents and friends, but later plunged even deeper
into financial
debt. The problem then becomes tragic.
"My advice is that each boy and girl before marriage should
not only receive guidance on how to conduct themselves in
married
life but how to prudently manage a household. They should be
shown
the facts, the obstacles, and the difficulties, and someone
should
calculate with them how much they will earn and how much they
can
spend. We should encourage them to live according to their
means and
even to save. It is necessary to tell them a little about
ourselves,
how we dealt with our lack of finances in the beginning of
our married
life so that they will not be alarmed. (One gemach
manager
claimed that it is permitted to tell stories about others if
our particular
past experience is nothing to brag about). We must open their
eyes
to see clearly the obstacles waiting for them through
life."
In a case where a young couple becomes financially involved,
the gemach manager suggests to his parents that they
help them,
but this help should not be done easily or without any
conditions.
Sometimes it is permitted to offer them long term loans of a
relatively
large sum in order to end the large deficit disturbing their
lives
and causing immense tension. The loan should be specified as
being
a "Program for Logical Management." This must be done gently
and with tact so as neither to confuse the couple nor to show
one
to the other as irresponsible or as a spendthrift. Perhaps it
is preferable
that these discussions be done separately with the husband
and wife
so as not to raise doubts that have not yet been aired.
On the other hand, the gemach manager warns that
parents,
even those who have the financial means, should not be too
freehanded
and should not hurry to cover their children's debts without
any supervision.
"In the end they will have to confront this problem again. If
the children do not tangibly feel the taste of difficulty,
the pressure,
and even the fear involved in being financially entangled,
they will
never know how to be careful."
In conclusion, he related to us a joke that a gemach
manager
once told him: "One person used to come regularly to my
gemach
accompanied by his young son. When I asked him why he always
brings
his child along, he was surprised that I should ask such a
question:
"There is an explicit halocho that a person must
always
teach his son a profession."
What is there to say about such a person? Decide for yourself
if to laugh or cry.
