Enhancing Community Economic Conditions through Women-Centered Financial Literacy

“Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. https://www.investopedia.com/”

Prologue

On one occasion, RELUNG, together with friends who are village facilitators in Tlogopakis, had the opportunity to chat and have a light discussion with a group of women about the economic conditions in the village and at the household level. At that time, my friends and I did not set any targets for the discussion, it was just a “chat” about issues related to the social and economic roles of women.

We asked the women at that time, “Have we been spending money or shopping based on needs or wants?”

In a soft and somewhat disjointed manner, the women responded,

“It seems like it’s based on wants, Sir…”

“Well, there are always promotions, Sir, it would be a waste not to buy.”

“What do you mean by there are always promotions?” I asked.

“Oh, you’re so outdated, Sir, it’s on the phone.”

“Oh, really?”

Even though they live in the mountains, these women are very familiar with online shopping.

“Then, what if it turns out that our shopping is based on wants rather than needs?”

“It would be chaotic, Sir, our expenses would exceed our income.”

“Okay, I get it. So, how do we prevent that from happening?”

In unison, they answered, “Debt…”

“Oh wow, that’s quite an answer,” I responded.

“Relax, Sir, we still have MEKAR.”

“What kind of creature is that?”

“It’s the one that often offers us loans. Even before we’ve paid off one, they offer another,” one of the women explained with a playful tone.

This initial conversation was very interesting and prompted us to ask more questions.

“So, what do you think actually causes our expenses to exceed our income?”

“Children’s snacks, Sir!”

“How so?” I asked.

“It’s a lot, Sir, both during school and after.”

“The one who takes the children to school, which is the mother, also ends up buying snacks,” someone added.

“So, how much do children spend on snacks per day?” I asked.

“At least 20,000 rupiah per child, Sir.”

“And if there are two children?”

“That would be forty thousand rupiah, Sir, that’s the minimum. And if there are village events, it could be more.”

“No wonder many of the fathers complain about headaches and back pain during meetings.”

“Yes!” they replied.

Reflection Together

There are many things to note from the conversation with the women at that time. The conversation did not stop there but continued with discussions about some basic concepts related to the economy and social life.

Distinguishing Between Needs and Wants

So, what are needs and wants? In the discussion, it was explained that the difference between meeting needs and wants is related to the risks that must be borne or faced. A need is something that, if unmet, will cause significant risk. For example, eating three times a day is a need because if not fulfilled, it will lead to poor health. Another example of a need is education costs, because if not met, the child may not finish school. On the other hand, a want is related to the level of satisfaction, and if not fulfilled, it will only reduce the level of satisfaction itself.

Distinguishing Between Benefits and Profits

The discussion then continued to talk about the terms “Benefits” and “Profits.” What are the similarities and differences? It was understood that “Benefits” are something obtained when a person or a certain party can solve a problem they face or meet a need. For example, if someone is hungry and then they cook rice, make vegetables and side dishes, and then eat a plate of rice with vegetables and side dishes, they get a benefit, which is being free from hunger or free from the risk of illness.

On the other hand, profit is different from the concept of benefit. The same person cooks rice, cooks vegetables and side dishes, then wraps them and sells them at a food stall, and if everything is sold, they will get what is called a profit. Provided that the sales revenue is greater than the cost of producing the wrapped rice. The difference between the sales revenue and the production cost is the profit obtained.

The Value of Money and Perceptions About It

The conversation continued.

“Ladies, how would you feel if you lost 2,000 rupiah in a day?”

“Wouldn’t feel it, Sir,” the women answered confidently (and somewhat proudly).

“But what if you lost 60,000 rupiah in a month?”

“Please, no, Sir…”

“But that’s inconsistent, you said 2,000 rupiah a day is very little, but when it’s 60,000 rupiah a month, it suddenly becomes a lot?”

“Hehehe… yeah, you’re right.”

“Now, let’s reverse the question. If we set aside 2,000 rupiah a day to save, would that be difficult?”

“No, it’s easy, Sir.”

“And what if we save 60,000 rupiah a month?”

“Hmmm, how do we do that?”

“If we save together, 30 people saving 60,000 rupiah a month would amount to 1.8 million rupiah per month or around 20 million rupiah in a year.”

“That’s interesting, Sir, it’s worth considering.”

Economics Is Not Always About Increasing Income

One thing that can be felt during that discussion was that economic conversations and discussions do not always have to be about how to increase income (or in macro terms, growth). The economic discussion that afternoon provided and opened up the perspective that current economic practices are not based on understanding and awareness of what the economy itself is, and are far from a multidimensional welfare perspective. Economics is only seen as a process/activity to generate the highest possible income and to spend based on wants, not needs. It’s like playing soccer with a focus only on attacking (offensive). But what about defense (saving, for example), or investment (preparing new players) as a long-term strategy?

We can also understand that, like a soccer team that is attacking, it also increases vulnerability to defense. Similarly, in economic development strategies, if the focus is only on production or increasing income, certain vulnerabilities will be created in the broader context of welfare, both individually and socially.

This is where financial literacy is needed as a tool for economic governance based on families and communities. Financial literacy is not just a financial management or accounting technique. Financial literacy should not be understood merely as access to finance (read: guidance on accessing banking). Financial literacy should be able to dissect and expand the community’s thinking about household and community economic governance, based on awareness and understanding of the meaning of welfare itself at the individual, family, and community levels.

Contributor:
Akhmad Arief Fahmi