Do young people in SA know how to build a financially stable future?

Do young people in South Africa know how to build a financially stable future? Not really according to a new survey that shows that more than 50% of young people are far from achieving financial freedom and building wealth.

Youth unemployment in South Africa currently sits at 45,5% according to Statists SA and the 1Life Insurance Youth Generational Wealth Survey shows more than 50% of young people who do have a source of income do not know how to build a financially stable future.

The study also revealed that less than 30% of South African youth have a solid monthly budget in place.

“Looking at our book, we identified a big gap in the youth market when it comes to financial education, despite being the future consumers who have the potential to build wealth and break generational debt in their families,” Siphelele Sokhela, brand manager at 1Life Insurance, says.

“If we consider that the current cost of living has already made it hard for households to get by this gap is an indication that this reality may not change anytime soon and in some families, it may never change if the youth are not equipped to carefully and smartly manage their money.”

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Less than 20% have insurance, which is worrying

1Life statistics show that less than 20% of young people have any form of insurance, which means that of the 54% who are employed, only a small portion of them have the necessary financial protection in place should the worst happen.

Furthermore, Sokhela says, only this small portion has a real shot at breaking the debt chain and building generational wealth in their families.

“The good news is that 80% of the respondents know that they can start building wealth as soon as they land their first jobs.

However, the lack of financial education and misconception when it comes to wealth building tools available to them, are major contributing factors to them starting their financial life on the back foot – leading to lack of financial security.”

For example, she says, only 40% of the respondents see having insurance policies, such as life cover, or retirement annuities, as a means to build wealth while both are essential. 

A closer look at the statistics indicates that only 35% of South African young people have life insurance, while only 13% have dread disease cover and 18% have disability cover.

Sokhela says this may be due to many factors, of which affordability may be one, especially in our current economy.

“However, if we consider that less than 30% of South African youth have a solid monthly budget in place, this is a clear indication of the lack of financial management skills among the youth, largely due to insufficient education in this space.

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One thing to have money, knowing how to use it is another

“Having money is one thing and knowing how to use it is another. It is true that the current economy has made it tough for South Africans to get by and without a budget in place, it is impossible to manage money wisely.”

She points out that when it comes to financial literacy, over 45% of the respondents indicated that their source for how to manage their finances is social media, which is why 1Life has a partnership with financial influencer and award-winning YouTuber, Yolenda Jawe.

“We collaborated due to our shared views on financial education and launched this inaugural youth survey to share financial knowledge and gain insights from the youth of today.”

Sokhela says while you could get away with not having financial literacy in the past, that is no longer the case.

“Financial literacy has become a necessity for all South Africans, not only when it comes to meeting the day-to-day financial demands, but also in making sure that you build a financially stable future for yourself and your loved ones.

“This is the reason I am driven to play my part in educating the youth and all consumers about the importance of managing their finances well and how this can help break generational debt and set them up for a bright financial future,” says Jawe.

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Fortunately, there is a lot of knowledge available for young people

While there is a wealth of knowledge that you can get from social media, it cannot be used as the only source for information and when it comes to improving your financial literacy, you should look for other free tools that can elevate your position, such as 1Life’s Truth About Money.

Sokhela says here you can get access to multiple short courses as well as an extended financial literacy course, which are all freely available to South Africans.

These courses offer a wealth of information and tools to show how to pay off debt, how to make your money last and how to create generational wealth.

The survey revealed that about 60% of the respondents incurred some of their family’s debt, which further validates 1Life’s drive in empowering South Africans with the knowledge, tools and products to cut generational debt and start growing generational wealth.

“What often sets the financially secure apart from those who live with financial anxiety month after month, is having a budget in place and the financial literacy required to properly manage your money.

With these in place, you can ensure you not only have enough to get through the month, but that you have enough left over to put aside for emergencies,” Jawe says.

Sokhela says there is no doubt that the current economic situation is hard on the pocket, but there are tools available to help the youth build financial stability amid the economic chaos.

“The best way to navigate these challenging times financially is to seek financial education and speak with a financial advisor or insurer.”