Financial freedom in a country where almost one out of every two people above the age of 18 fall below the upper-bound poverty line may sound unattainable. According to STATS SA, in a report filed on the 13th of August 2020, these are persons who spend R1 268 per month on food and non-food items. STATS SA’s Poverty Trends in a South Africa report that was released in August 2017, shows that a quarter of South Africans lived in extreme poverty in 2015. More than half the population (56%) was living in poverty as mentioned earlier. According to the report, the people most vulnerable to poverty in South Africa includes women, black people, especially those of the Eastern Cape and Limpopo, minors, and youngsters. According to an article published by fin24 titled Why South Africans struggle to save, this is due to the inherited riddled history of South Africa that the country continues to struggle with financial oppression, inequality, and financial illiteracy.
According to Rueben Arendse, a manager of the financial advisors’ department at Mutual Park’s Old Mutual “Earning money has become difficult due to unemployment and an increase in the cost of living due to reasons such as inflation”. If one is lucky enough to find employment and earn a salary, self-discipline is key to obtaining financial freedom.
Young people are often referred to as the leaders of tomorrow and therefore financial literacy and financial freedom for the upcoming generations depend on the information and the knowledge that the South African youth will carry through the coming years.
Financial literacy for the youth
To understand financial literacy means that you are very well on your way to financial freedom. First things first, what does it mean to be financially free? Joanelle Smit, a director who has been offering financial advice and investment services to clients at Spectro Plan BlueStar, a Sanlam entity since the year 2019 defines financial freedom as a state in a person’s life in which you have enough savings, investments, and cash to afford a lifestyle that you may wish for yourself and for your family. This does not mean being rich or having huge amounts of money saved up for ‘rainy days’ but knowing how to manage your finances and having enough when needed.
This now leads to financial literacy, which is better defined by Jason Fernando who is a director at Voyager Holdings. In an abstract titled What is Financial Literacy by Jason. Fernando, financial literacy can only be claimed when one is able to understand and use various financial skills, such as personal financial management, budgeting, and investing.
Being financially illiterate can lead to several pitfalls, such as being more likely to accumulate unsustainable debt burdens. This in turn can lead to poor credit scores and bankruptcy.
Thankfully, there are now more resources than ever for those wishing to educate themselves about the world of finance. One such example is getting a bank that charges you less and offers more than just banking but a range of free learning resources or articles to help you be savvy with your finances. However, to be savvy with your finances may mean that there should be some source of income. This now becomes a challenge for most youngsters in South Africa, especially those who are juggling academics and their social life, finances may prove to be a handful. The problem is not, although a contributing factor, having a source of income but financial literacy.
Since financial literacy must have an effect in one’s financial freedom, which in turn frees you from financial stress and off-balance spending. Wouldn’t you want to get in on that kind of a cool culture of money? Not having to wonder where your next meal is coming from or if your bank will approve your loan? This way of living could reduce debt and have your needs met easier.
Being financially free enables you to have many options, you are never without money. This may be how you achieve that…
Here are ways to achieve and attain financial freedom:
- Side hustle- getting a side hustle is the first step to “a short journey to financial freedom”. This will ensure a source of income and discipline. This may be the case, but it does not have to be overtly demanding subsequently affect your studies. In the contemporary times we live in, it is rather much difficult to find work, so being entrepreneurial minded will better your chances of getting a source of income. A skill, or an idea that you always had but never believed in it, well now may be the time to believe in it. Examples of this are the two young people who are studying and doing something else on the side. Ngasii is a recording artist who is a master’s candidate at the Nelson Mandela University, on the side he has recorded songs with the likes of Prince Kaybee and Nkululo Mtyingizane who is an education student and, on the side, drives an ehailing services with Uber and Bolt. Both are enjoying comfortable living out of their own pockets and are renting their own spaces in Summerstrand, Gqeberha and would not say anything further than that.
- Getting a bank- getting a bank that understands your hustle and acknowledges you being a student takes a little bit effort and lot of sitting-down-thinking. Once you get it, your journey may begin. Banks such as the recently launched TymeBank that works with Pick’n Pay stores offers banking opportunities for all ages and one stands a benefit of earning Smart shopper points whenever you swipe your TymeBank card at any store and double those points in a Pick’n Pay store. Those points can in turn be used to purchase goods at any Pick’n Pay store. Debit card swipes only cost R3 per transaction.
- Budgeting- drawing financing plans and expenditure is like adding fuel to a car. You will simply not get ahead if you do not effectively plan for you journey. The feeling of wondering what happened to your money is the result of not doing your accountings. It does not have to be done in a ledger such as Microsoft Excel, but a simple detailed plan of how you will spend your money will do.
Information on how to budget or save money can be accessed at a bank branch while you are shopping for the best bank for your needs. All banks are keen to give out the information as they will be trying to win a new client over, and that in this case will be you.
- Stick to your budget– consistent budgeting and sticking to it, shows and requires a great deal of discipline and commitment. You tend to also realise or pick up mistakes you may have done in your budgeting, this helps you in making wise financial decisions. In an interview with Anzio Lotterite, a financial advisor at Mutual Park old Mutual, he said his best advice is for one to self-disciplined and always live within their pay grade. “We all want nice things, but we can’t all have them. Take care of your financial needs first” Lotterite said.
- Save up– this appears to be the hardest part of the “short road to financial freedom”. However, as the financial writer Dave Ramsey puts it in his financial literacy abstract, “If your goal is financial freedom, you need a sort of a lifeboat for the unexpected life events that happen to all of us, such as broken appliances, medical emergencies, etc. Once you have that fully funded savings account, you will start to feel more flexibility in your budget”.
- Do not live above your means– part of making wise financial decisions is knowing what you can afford or buy and still survive with savings on your bank account. Most students or youngsters love to splurge money on temporal things, and this is a great downfall for them. Khayalethu Mdekazi is a living example of what it is to live above your means, and he tells of how he should be featured on the TV show called “I blew it” one day. Mdekazi inherited his father’s life cover pay-out and spent it all entertaining friends who later left him with nothing. “I do not know how much it was because it came out in different amounts, and it came twice in one year. I remember I afforded to Toyota Avanza seven-seater cars, and I crashed them.” Mdekazi says today does not even have a place of his own and has gone back to his mother’s house. He also tells of how he almost set his mother’s house alight because she had refused to give him R10.
Financial stress can be a waking nightmare for young people, and it can be a huge factor in talented students dropping out of varsity or slipping into depression. Financial literacy should be compulsory for young people, especially students. Financial freedom can be attainable, and it can be achieved through passive profit. “Passive profit is what you have after your fixed expenses have been paid. It means you still have enough money to live comfortably.” said Joanelle Smit.
Water your plants while praying for rain…
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Victor Phemba 