Too many young South Africans are unable to reach their full economic potential because they are trapped in a vicious cycle of debt says John Manyike, Head of Financial Education at Old Mutual.
According to him, recent statistics reveal a shocking 214 percent increase in consumers aged 21 to 25 applying for debt review from 2014 to 2015.
“These statistics highlight the fact that young South Africans are increasingly relying on credit to provide for themselves and their families’ basic needs, and indicate a growing culture of people living way beyond their means.
This credit-funded lifestyle, promoted by popular culture, exposes people to the risk of getting trapped in a cycle of short-term debt from an early age.
“The exceptionally high interest rates commonly associated with short-term loans mean the debt increases exponentially over time, raising the risk of people falling prey to mashonisas or loan sharks.”
Manyike says a key reason for the increase in credit addiction is the low level of financial literacy among young South Africans.
“Youth Month is therefore a fitting opportunity to focus on financial education initiatives that can assist in freeing young people from such a cycle and, in turn, teach them to save and build wealth,” says Manyike.
Below is a clip on how not to save money…
https://www.youtube.com/watch?v=UXsBut-bGEQ
Money saving tips for the youth. (Tips by the African Bank Group):
TIP #1: TRACK YOUR SPENDING
Most teens use debit cards to purchase their goods and lose track of just how much they are spending.
Keeping a record you can refer to often acts as a good handbrake and puts a check on unhealthy spending patterns before they become a problem. Find the tracking mechanism that works best for you.
Tip #2: DEVELOP FINANCIAL DISCIPLINE
All over the web, there are tons of tips telling you not to carry very much cash.
It’s assumed that if you don’t have it, you won’t spend it. But the truth is you’ll actually spend more when you’re using your debit card or a credit card.
Here’s what to do:
a) Decide how much cash is safe to carry in your wallet.
b) When you want to buy something, ask yourself this question,
Can I do without it today?”
If you can, don’t buy it. Most of the time you’ll quickly forget about the item and you’ll have saved the money you would have otherwise wasted.
c) If you’re saving up for a larger purchase, make sure you deposit money into your savings account on a regular basis so it can accumulate safely. Only when you have more than the amount you need should you buy the thing you’ve been saving up to buy.
Tip #3: PAY ATTENTION TO YOUR MINUTES AND TEXTS
In other words, know your phone plan.
If you are the one who’s responsible for your cell phone bill, and especially if you’re not, watch your minutes and texts. You do not want to experience the shock of a higher than expected phone bill.
Keeping tabs on your minutes and texts help keep your phone bill in line each month and helps keep you in line with your parents too.
Tip #4: TAKE YOUR OWN LUNCH
Taking your own lunch from home is a lot healthier and a whole lot less expensive than spending it all at the tuckshop.
Adults in financial trouble quickly admit that eating out is often their biggest mistake financially.
Once they stop eating out all of the time, it’s amazing at how easy it is to pay their other expenses and have a little money to save and invest each month. If you start this money-saving habit now, you’ll be a lot less stressed later.
Tip #5: TEACH YOURSELF
You’ve probably learnt a little about money, saving and investing, creating businesses, etc., in school or at home. But if you really want to be financially successful in life, it’s up to you to teach yourself about these important topics and practice them in the real world.
Tip #6: MAKE YOUR OWN MONEY
Making money is different to earning money. When you earn it, you are trading your time and energy for money. You work an hour and get paid for an hour.
When you make it, you’re working lots of hours building businesses and then getting paid over and over and over again for that same hour.
There’s nothing sweeter than learning how to write your own pay check when you’re young. By doing this, you’ll always be the CEO of your own life and you’ll never be dependent on a job.
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