One of the more comforting things I noticed when we moved to Israel was not the very low paycheck we had, but the way everybody seems to be in the same boat, trying to make their shekel stretch as far as possible. There is no shame in post-dating a check, any checkout over 200 shekels can be spread out into “tashlumim” (payments), and the bank offers a very pleasing line of credit for when the monthly expenses are suddenly over budget.
These same comforts, however, can be very dangerous if not used wisely. It is easy to lose track over how many purchases you are paying in installments, and if you are not careful they can become significant monthly expenses. The “minus” that the bank so easily gives you accrues interest and you can very easily reach sums that you won’t be able to pay off with your current salary. I remember when I brought my first paycheck to the bank to open an account. We previously had an account at Bank HaDoar, which does not allow an overdraft, so I told the bank we didn’t need one. Of course they didn’t agree- it was free and if you didn’t use it, you don’t pay anything. So I agreed. Based on my monthly pay of 10,000 shekels, they wanted to open an overdraft of 25,000 shekels! I laughed and asked how they expected me to pay back 25,000 shekels when I only earned 10,000 shekels a month? Again, they smiled, and in the end I walked out with the overdraft. I am forced to admit that there were times that we actually used that whole amount (summer camp, Pesach) and subsequently paid it off, but it was always an extremely stressful period not knowing whether we could get cash out of the bank because our line of credit was used up.
Since then our salaries increased, we tightened our budget, and we actually have an emergency fund saved. We were fortunate to be able to do this on our own, but many people can’t. For them, there is an organization called Paamonim. This non-profit organization helps people get out of financial distress not by handing them money, but by teaching them how to manage the finances and keep their budget balanced; whatever their financial status. Mekor Rishon newspaper followed some of the families helped by Paamonim and posted the tips that the families learned- you can read about one family in a previous post. I hope to post other stories, but in the meantime if your Hebrew is good, you can read more stories/tips on Paamonim’s Hebrew web site.
Tip of the day:
זכות (+) and חובה (-) : make sure you know the difference on your bank statement! When we closed our first bank account, we missed the little ח next to the sum and instead of expecting a 4000 shekel refund, we had to pay 4000 shekels. That was painful and embarrassing!