Given the current macroeconomic challenges in South Africa, including high unemployment rates, inflation, rising living costs, and economic uncertainty, the need for improved financial literacy amongst our youth has never been more pressing.
Limited financial knowledge is an issue that affects many South Africans, spanning different ranges of income and different levels of education. Despite various stakeholder efforts to advance financial literacy over the years, investment literacy remains considerably insufficient.
According to the results of a 2021 survey by the Organisation for Economic Co-operation and Development (OECD), the financial literacy rate among South African adults is as low as 42%.
Worst yet, it is estimated that only 6% of South Africans will be able to retire comfortably. Recent outcomes from an assessment of Sanlam Corporate’s internal member data has showed that while 65 remains the official retirement age, most people will need to work an additional 15 years to achieve financial security in retirement – making the age that at which most citizens can afford to retire comfortably being closer to 80.
Records from one of South Africa’s biggest banks shows that the country’s average middle-income earners spend up to 80% of their salary within the first five days. A leading debt solutions company says that consumers applying for debt review are spending an average of 62% of their take-home salaries servicing debt. For those earning more than R35 000 per month, this average figure increases to as much as 71%.
Financial education is about cultivating a mindset that prioritises saving, budgeting, investing and responsible spending. By introducing these concepts early, children can develop healthy financial habits that can benefit them throughout their lives.
The Financial Planning Institute highlights that a major barrier to enhancing financial literacy in South Africa is the limited access to financial education. Many schools either do not offer financial education at all or provide it in a way that lacks the depth necessary to equip students with the skills needed to manage their finances effectively.
Satrix, South Africa’s leading provider of index-tracking products, plays a key role in increasing financial education through several programmes, one of which is partnering with Money School – an annual initiative designed to educate learners about investing, personal finance, and financial planning. First launched in 2022, this virtual financial literacy streaming platform provides financial education to Grade 11s and 12s. To date, Money School has targeted 113 schools nationally, with plans to grow its reach even broader in the coming year.
Duma Mxenge, Head of Business & Market Development at Satrix, says that their motivation to collaborate with Money School again this year stems from the understanding that when learners receive strong financial education, they are less likely to fall into debt and are better prepared to save and invest.
“As a company, we are dedicated to making investments more accessible and affordable for all South Africans, showing them the power of investing for financial resilience, wealth creation, and inter-generational wealth transfer. If the key principles of building wealth, rather than living beyond one’s means, are understood early on, an individual’s financial journey can be incredibly successful,” Mxenge says.
Streamed from 15h00 – 16h30 every Thursday from 27 February, the first hour of each session is allocated to specific topics presented by subject experts, with the remaining 30 mins allocated to an interactive Q&A, where learners are encouraged to ask questions and engage with experts.
All sessions are also available online at https://moneyschoolsa.co.za/, along with additional learning material in the form of worksheets, quizzes and revision notes
The sessions currently available include understanding personal finance, budgeting and saving, introduction to investments, risk management and insurance, and financial planning for the future.
While many people may think that investing is only for the wealthy, the reality is that starting to invest early can significantly help achieve long-term financial goals. Youth have time on their side – with the right guidance, they can benefit from the compounding effect of investing.
Although South Africa’s youth unemployment rate is high at 45.5%, many young people who do find a source of income still lack the necessary knowledge to handle their finances properly.
Additionally, a more financially literate youth can play a key role in South Africa’s economic growth, by empowering young entrepreneurs to better succeed in their endeavors, generate employment and stimulate economic activity, while earning an income for themselves.
With more exciting news about the Money School platform coming soon, this initiative aims to empower the next generation of South Africa’s youth to better navigate debt and credit traps, while harnessing the power of investing to help them build long-term financial security.