By Sabrina

According to SASI (the South African Savings Institute), the savings culture in SA is continuing to decline. It wasn’t that healthy to begin with, but it seems that more and more people are living beyond their means.

As opposed to countries like China, where the one child policy prevailed between 1980 and 2015, and Japan and South Korea, where fewer couples are opting to have children, giving rise to ageing populations, South Africa has a relatively young population, with an estimated 20 million people aged between 15 and 34. Reports from SASI indicate that these young people have little interest in saving their money. They are more inclined to tap into the availability of credit to get what they want now, rather than delaying gratification until they have enough funds to make a once-off, full payment. SASI attributes this trend to lack of financial literacy, not only amongst the youth, but in all segments of the population.

“We need to fundamentally stop living beyond our means and drive a savings culture to break the cycle of inter-generational debt,” says Prem Govender, Chairperson of the SASI Board. “With the credit culture prevailing here in South Africa, more and more people are paying money out merely to cover the finance charges and interest on their debt, leaving little left over as actual disposable income.”

HOW DO WE REVERSE THIS TREND?

Over the long-term, the best way to get the population to buy into improving our savings culture is to start with the kids. Enhancing one’s financial well-being is, after all, a long-term exercise, so – as any financial adviser will tell you – it’s best to start young so that budgeting and wealth creation become an integral part of one’s life philosophy.

HOW TO GET THE KIDS TUNED IN

The old fashioned way of getting children to appreciate money was the notion of getting them to do chores around the home and then paying them for work done. But that could involve a lot of nagging and effort from the parents – who may have grown up with servants, so they don’t really know much about doing chores themselves. That’s not to say that chores are a bad idea – they equip kids with life skills for other reasons, too – knowing how to cook, clean, tidy up, do the laundry – these are everyday tasks best learnt when one is young, anyway.

On the upside, there are other ways to get the kids more street-smart about their finances.

MAKE IT A GAME

One of the methods to get the kids more engaged without having to nag them is getting them involved in comparative shopping. You can discuss the pros and cons of bulk buying vs buying a smaller quantity; retail strategies such a 3 for 2 offers; and loyalty cards that give you discounts and ‘cash back’ at the end of a cycle; as well as how much one can save by not having to pay for those plastic shopping bags – not a lot, in the bigger scheme of things, admittedly, but 100 shopping bags over a 3-month period would cost an extra R100 at the current price. Comparative shopping is also an excellent technique to get the kids to practise their mental arithmetic.

Examining the family’s monthly consumption of electricity, gas and water, and discussing how the family can save on these utilities, is another useful exercise. Looking into whether it would be better to buy a vehicle on credit vs buying it outright, debating whether vehicle hire would be an option or merely using Uber for the odd occasion – these are all useful ways to get the kids more in touch with the realities of life.

BOOKS AND ONLINE COURSES

There are various books on the market that could give you some guidance as a parent, such as Finance 101 for Kids, Teaching Kids about Money, Money Smart Children and Make Your Kid a Money Genius (all available from takealot.com), but sharing that information with the kids may be a challenge.

The other option is to have them go online. MoneyTime SA (www.moneytimekids.co.za) offers a financial literacy programme for tweens and teens aged 10 – 14 years. It’s an online course that does the teaching for you – which is great for this generation because they hate being told what to do.

This course allows the kids to work through the programme independently and there are quizzes and tests that earn them virtual money once they have completed the modules and answered the questions – so much better than being paid for doing chores! Their earnings go into a ‘Current’ account and they can choose to spend, save, invest or opt to donate a percentage of their virtual wealth to charities.

Adding another dimension to their financial literacy journey is the link between career choices and earning potential. Each child starts as a gardener. They can work their way up to a better-paying occupation by investing in further education. For each position up the pay scale, there’s a cost to achieve a better qualification, but the trade-off is that each time a module is completed at the higher level, they are paid more. This establishes the important connection between seeing education as an investment, and a route to earning more income by becoming better qualified.

NET WEALTH

The MoneyTime SA course also shows that earning money by working (to complete the modules) is not the only way to increase one’s net worth. Earning interest on savings and getting a return on investments are essential ingredients to achieving growth. As they complete more modules, more opportunities to invest are opened up. This section is designed to teach the kids the value of long-term investing and it also makes them aware of what the risks might be.

OTHER ONLINE OPTIONS

If you’re not sure about committing to an entire series of the MoneyTime SA modules, here are some YouTube video channels you can try:

• Learning Mole
• Easy Peasy Finance
• Smart Kidz Learning
• The Rich Dad Channel
• TEDx Talks

CHANGES IN ASPIRATIONS

Although we can all accept that what one generation prioritises is not necessarily something that will even be relevant for future generations, if the crisis of the pandemic has taught us nothing else, we can appreciate that financial stability is imperative if we want to live healthy, happy and relatively stress-free lives.

Many school leavers, however, are questioning the aspirations of owning a property, driving a fancy car, embarking on a high profile (and often very demanding) career – and maybe even whether they want to have kids or not. Some place more emphasis on having more freedom to do what makes them happy, opting for a more experiential lifestyle, rather than accumulating a lot of material possessions that will undoubtedly weigh them down. But even this option must surely involve some kind of financial stability.   

The bottom line is that it’s great to be ‘in the moment’, spending without a care in the world to achieve that ‘feel good’ factor. However, adding a long-term component to their outlook on life could lead to some ‘extra special moments’ further down the line. But that’s only if your kids are conversant with all the right strategies to make the best of the financial resources at their disposal.

References:
https://savingsinstitute.co.za
https://moneytimekids.co.za
https://en.wikipedia.org/wiki/One-child_policy
https://www.reuters.com/article/us-southkorea-fertility-rate-idUSKBN2AO0UH
About 27,5% of the population is younger than 15 years: www.gov.za/about-sa/south-africas-people