The youth stage of life is a time of growth, marked by significant personal and work-related milestones. From completing your school education, pursuing further studies, and finding a job to the prospect of marriage and starting a family, this stage of life is no doubt exciting.
In today's reality, we live in a world where there’s pressure to be seen, liked and admired and, thanks to social media, we’re daily exposed to the highlight reels of others’ lives and either left comparing, competing or completely disillusioned when confronting the limitations of our own lives.
Against this backdrop, the importance of placing the spotlight on our youth and educating them about financial health cannot be overstated. We have the opportunity to help change their current reality by empowering them to make better financial decisions, live within their means and plan for the future.
Current situation
Many of South Africa’s youth do not receive proper guidance (either formally or informally) about finances and, youth in low income households lack access to financial services. And as adults, they are susceptible to predatory lending practices, high interest rate loans and debt.
Young people often learn about finances informally through their upbringing, such as observing and listening to their parents or caregivers, adults whom they admire, and peers. The problem is, the guidance that especially low income youth receive on financial literacy is not consistent with sound financial management principles. Subsequently, they remain vulnerable to the consequences of low financial literacy.
Why the youth need to know about financial literacy
“Our youth need to be educated on topics such as saving, spending budgeting, how tax works and the importance of focusing on short term and long term financial goals i.e. paying off debt, saving for tuition or purchasing a car or property and making provision for your retirement”, says Thian de Beer, CEO at Picsa.
Thian continues, “Low financial literacy causes young adults to miss out on valuable opportunities to build on and improve their financial health. When youth lack the financial knowledge they need to make informed decisions, they are more likely to become (and stay) trapped in cycles of poverty and debt thus contributing to financial insecurity as opposed to helping them break down barriers and end negative cycles setting them up for prosperity.”
Closing the youth financial literacy gap
Says Thian, “Financial literacy is an essential skill for individuals of all ages, but it's especially important for young people learning to navigate the complexities of adulthood. In South Africa, where economic challenges and inequality remain an ongoing issue, the need for financial education as a means to empower the next generation is crucial.”
These financial literacy skills provide a good starting point that will serve young adults and their families well for a lifetime:
Save for what you want and live within your means instead of falling prey to debt.
Make budgeting a habit every month, as this will help you keep track of your spending and get you started on building up savings and investments.
Establish an emergency savings fund to help cover unexpected life events instead of borrowing money.
Plan for retirement so that you can enjoy the benefits of compound interest and growing your savings over time.
Picsa offers a range of savings, short term and long term investment, funeral plans and responsible loan options to low income workers in South Africa. Our EarnBacks loyalty programme rewards members for making good financial choices by paying their rewards into their short-term savings account once a year. Visit our website at www.picsa.com to learn more.