South Africa recently celebrated Youth Day. The public holiday that recognises the role of the youth in the fight against the Apartheid regime and remembers the Soweto uprising on the 16th of June 1976, where thousands of high school students marched and died for their educational liberation.
Even though this uprising will play a crucial role in the future of South Africa for years to come, education in South Africa still remains problematic. Another problem within South Africa’s education system is financial literacy, or a lack thereof. Our rainbow nation is notorious for having a poor savings culture. A recent study has shown that only 20% of South Africans have any kind of formal savings with a recognised financial intuition. This can probably be attributed to our failed education system – it’s a vicious circle to say the least.
As a young, working adult, I am still lost when it comes to financial terms like tax, interest, VAT, affordability and the entire glossary of financial terms that can be found in most written agreements. I envy my, usually older, colleagues who seem to have all their personal finances sorted and in order. South Africa’s youth, those under the age of 35 – yes, you too Thami Ngubane, constitutes 77% of our country’s population. Recent statistics show that I am not the only young South African whose facial expression changes to that of a vacant, big-eyed sheep when asked about personal finances, luckily.
Young South Africans face a lot of challenges on a daily basis. Apart from load shedding (how am I supposed to take an Instagram pic of my dinner) they also face challenges like e-tolls, rising food and fuel costs and then of course unemployment. South Africa’s unemployment rate is currently at 26.4%, the highest level since 2003. The assumption can be made that the biggest segment of our country’s population is therefore unemployed and unable to contribute to the economy.
Some financial institutions have tried to connect with the youth market by launching all kinds of financial apps for smartphones and tablets. Although this seems like a great idea on paper, because we’re permanently glued to our Android or iOS life support devices, most young South Africans still rely on the opinions and suggestions of friends and family when choosing their banks and making financial choices.
So why don’t we save and what can we do to change that? The first answer, I guess, can be found in the previous paragraph. The average South African barely make ends meet on a monthly basis. There simply isn’t enough money in most monthly budgets to put away something at the end of each month. According to Elizabeth Lwanga-Nanziri, CEO of the South African Savings Institute (SASI), the inability to save goes hand-in-hand with the consumer debt crisis South Africa is currently facing and can be largely attributed to the gap in financial knowledge. Financial education is the answer that could change the attitude most South African have towards saving money. The second answer seems simple, but implementing it is not without its challenges.
Since 2006, SASI has been encouraging South Africans to save by running a month-long awareness campaign that takes place in July every year. This year’s campaign will focus on savings literacy along with the theme of promoting a savings culture in South Africa. Initiatives like these are crucial baby steps that Mzansi needs to take. Financially literacy programmes can provide South Africans with more information about the different types of savings and investments available to them. Ultimately, programmes like these will attempt to grow and nurture a saving culture in South Africa that will lead to increased incomes and better management of personal and household finances.
Savings doesn’t necessarily have to go towards something like new clothes, an expensive holiday or a new car. When you put your monthly savings contribution away, it should rather be towards an emergency fund, a retirement fund, your education or an investment. You don’t have to save a huge amount every month either – small amounts will add up over a few months. You’re probably thinking you don’t have a cent to spare at the end of each month, how are you going to save? Simple. Spend a night or two at home every month and take the money you we’re going to spend and deposit it into your savings. This might sound easier said than done. Your ears are deceiving you -it’s just plain easy. If you’re scared of becoming a crazy cat lady, with nothing but your savings and Fluffy to keep you company one day, read more about having fun on a budget.
With the cold raging outside during the month of July, the time to start saving couldn’t be better. Saving should not just be seen as an action, but also as a habit. Think of saving as brushing your teeth. If you don’t brush your teeth every day from a young age, you’ll end up with dentures before you reach the age of 40. If you don’t save every month from a young age, you probably won’t be able to afford dentures at the age of 40. What greater motivation than avoiding rotten teeth do you really need? I want to encourage all readers, and all South Africans for that matter, to motivate friends and family members to save and to actively become a part of growing and nurturing a savings culture in our country.