Saving by the Poppa plan

You're 32-years-old and about to open your own business. You have a dream: to one day be rich and successful.

You start off with a scooter, sewing machine, a kid and $300 in the bank; almost 25 years later you own one of the most desired homes on Auckland's North Shore and the biggest compressor company in New Zealand.

How do you save and handle money well enough to go from nothing to everything? It's simple, according to my Poppa: "Work hard and keep at it."

Me, on the other hand, I'm a teenage girl who cannot resist shopping, and find myself spending way too much each month. So I decided for a month I would follow Poppa's guidelines and see if hard work and dedication were the key to saving money, or was it just the luck of the draw?

I interviewed Poppa about money struggles when starting and operating a business. I came away with three ways to handle money effectively, and would apply those ways to my everyday life for the next month.

The first thing he told me was to have a savings goal and stick to it. He described how many older "more experienced" men told him it was impossible and to give up.

However, he ignored them and stuck to his goal. "If the goal is to save $10 or $10,000, you have to commit and stick to it. As in a real business, if you're not bringing in enough income, and overspending, it's going to come toppling down, and you're going with it."

As I found it difficult to refrain from buying clothes and shoes, I found a method to help me save for the next month. To reach my savings goal, I locked away my Eftpos card in a drawer and threw away the key. That way, when I was out, there was no way I could buy those shoes.

The second struggle in handling money is how to distribute your earnings, as you need to provide for your basic needs, and still spend on appropriate things.

When starting a business, I wondered how you would pick what to spend money on. As I questioned Poppa on this matter, he simply answered, "Only buy what you need to get the job done." He went on to say, "Only buy what you can afford and if you can't afford it this week, wait till the next, and so on."

As my basic needs are covered by my family, I only had to buy items I wanted (not exactly needed), such as clothes, shoes, accessories and movie tickets. This then flowed on to the last money-handling rule.

The last rule I was to follow for that month was agreeing on what I could spend on desired items. "A good rule to follow would be saving as much as you can and spend a little bit - enough to enjoy life." I interpreted this as saving all but a quarter of my earnings a week.

I found this difficult, however, with my terrible spending habits, as a quarter of what I was earning could barely buy me a pair of socks.

To buy a good-quality item, I would have to save for around two months. Poppa often faced the same struggle when he first opened his business. As the business was new, advertising and equipment were the main expenses for the company. As more work became available, more men were needed to do the job.

This process was repeated and the company began to grow. More men meant more profit which led to more money to spend on new technology and other aspects of the business.

After examining my three rules, a month of brutal torture followed as I did not spend any money apart from a bit for a friend's birthday present. Even then guilt gnawed at my stomach.

I did reach my savings goal and, corny though it sounds, I learned the value of money and what I really needed in life. Several times I died after being shopping, but realised I will live even if I don't get that half-price dress.

Handling money is a skill and as long as I remember to save and distribute my money wisely, I could reach any savings goal I want. As Poppa says, "You've got to leave money for enjoyment in life." And enjoy I shall!

Hanna Zaloum, Year 11, Takapuna Grammar School