Besides distributing microloans, the Association for the Rural Development of Yilong County prioritizes working with peasants to cultivate the skills necessary for them to improve their own economic situation. A crucial part of that skill set is basic financial management. In the course of working with peasants ARDY has discovered that many peasants lack a basic understanding of how to keep track of their income, budget for expenses, and consolidate their remaining funds in an accessible and manageable way. “We would have couples,” Li Shibing, the vice secretary-general, explained to me, “where the husband would send money that he earned as a migrant laborer home to his wife each month, but by the end of the month she wouldn’t know where the money had gone.” Many peasants have no formal system in place for keeping track of expenses and are thus unable to make longer-term financial plans or to prepare themselves against emergencies.
In February of this year ARDY launched an initiative to encourage fiscal responsibility among peasants, which they called the “Rural Family Financial Management System.“ In essence, the program introduces peasants to the basics of fiscal management and provides them with the tools to document and trace their own finances. ARDY has designed a special balance sheet that allows peasants to easily record and keep track of all of their assets. The front of the form gives spaces to note the types and quantity of agricultural products a family might grow, the amount of property they own, what types of machinery and vehicles they operate, and whether or not any members of the family earn additional income through migrant labor. The back provides space to record living expenses, water and electricity fees, school tuition, and other expenditures.
Having designed these tools, the organization is beginning to hold training sessions to explain financial management to local peasants and to explain the use of the form to them. This week I accompanied an ARDY volunteer on a visit to a community leader in the village of Dengbao ?? to explain the financial management system. I watched as the volunteer walked him through filling out the form, stopping every once in a while to ask other family members how many jin (1 jin = 500grams) of various crops they had grown that year. To illustrate the purpose of the form, he used the example of opening a small shop. “First you have to figure out how much it will cost to buy all of the supplies you want to sell in the shop, plus to rent a storefront in the village. That’s your start-up cost,” he explained. “Compare that to your total funds for the year, which we found here by adding up the money that your family members make working in the city and the amount you made by selling vegetables. If the cost of starting the store is less than your income for the year, then you can afford to open the store.”
It was interesting to watch this insight, which may seem so intuitive for many, be explained in such careful detail. It was clear from watching the process being explained that a transfer of practical skills, like how to interpret and fill out a form, was only one of the goals of the meeting. The more fundamental task, and perhaps the more difficult one, is getting the peasants to believe that they are capable of changing their own economic conditions. This financial management training illustrates to borrowers that they must make their own choices regarding how to manage their resources, and that responsible management and careful planning can help them to fundamentally improve their lives.