On the 16th of June 2020, we celebrated Youth Day in South Africa.
Why do we celebrate youth day?
June is dedicated to the youth of 1976 who stood up against the Apartheid government and laid down their lives fighting for freedom and the right to equal education. This year marks 44 years since the uprising in which many children lost their lives while standing up against a system that sought to strip them of their identity, and break their spirit.
When June 16 was declared Youth Day in 1994, it was aimed at remembering those who died and suffered during this day as well as to continue their legacy and principles of selflessness, determination and devotion that is necessary for the success and growth of any society or nation. The sacrifices of these courageous young people who fought for equal education will forever be etched in the country’s history.
Our Youth and financial planning
Unfortunately, financial planning is not a subject offered in high school. This lack of basic financial education leaves many young adults clueless about how to manage their money, applying for credit, and how to get or stay out of debt.
It would be fair to say that recent unprecedented events related to the Covid-19 pandemic would have been the first severe economic crisis experienced by many South African youth. It is therefore important that they use this opportunity to learn and develop skills that they will use to build a firm financial foundation allowing them to deal with any future emergencies and to enhance their resilience after such events.
We share some financial planning tips for our youth below:
- Learn self-control and discipline
The sooner you learn the fine art of delaying gratification, the sooner you’ll find it easy to keep your finances in order. Although you can effortlessly purchase an item on credit the minute you want it, it’s better to wait until you’ve actually saved up the money. Do you really want to pay interest on a pair of jeans or a box of cereal? If you make a habit of putting all your purchases on credit cards, regardless of whether you can pay your bill in full at the end of the month, you might still be paying for those items in 10 years. (??)
- Take control of your financial future
It is important to educate one’s self. Learn to manage your own money. Take charge and read a few basic books on personal finance.
It is important to ensure your expenses do not exceed your income. The best way to do this is through budgeting. Once you see where your monthly income goes, you will be able to identify unnecessary expenditure. Making small, manageable changes in your everyday expenses can have just as big of an impact on your financial situation as getting a raise.
- Start an emergency fund
Life never travels in a straight line and this has been proven now more than ever as the economy has taken a knock, people have taken pay cuts or have lost their livelihoods altogether. Having money in savings to use for emergencies can really keep you out of trouble financially and help you sleep better at night. Also, if you get into the habit of saving money and treating it as a non-negotiable monthly “expense,” pretty soon you’ll have more than just emergency money saved up: you’ll have retirement money, vacation money, and even money for a down payment on a home.
- Save for your retirement
According to research released in the 2016 Sanlam Benchmark Survey, only 35% of pensioners believe they’ve saved enough for retirement, while a staggering 48% experience a shortfall between income and living expenses each month. Imagine working for over 40 years and then still struggling to make ends meet in retirement. Sadly, this is a reality faced by many South Africans.
Because of the way compound interest works, the sooner you start saving, the less principal you’ll have to invest to end up with the amount you need to retire.
- Guard your health
Medical aid premiums can seem exorbitant. But should one fall ill or have an accident, the medical bills can soon pile up, or you may not be able to afford the cost of the required care altogether. Nowadays, there are many medical aid companies offering basic plans based on your income and affordability.
Also, by taking daily steps now to keep yourself healthy, like eating fruits and vegetables, maintaining a healthy weight, exercising, not smoking, not consuming alcohol in excess, and even driving defensively, you’ll thank yourself down the road when you aren’t paying exorbitant medical bills.
- Protect your Wealth
If you want to make sure that all of your hard-earned money doesn’t vanish, you’ll need to take steps to protect it. Disability and income protection protects your greatest asset—your ability to earn an income—by providing you with a steady income if you ever become unable to work for an extended period of time due to illness or injury.