Youth Month puts South Africa’s young people, and the opportunities they need to build better futures, firmly in focus. Much of that conversation rightly centres on education, employment, entrepreneurship and skills development. But for those who are already earning an income, the conversation also needs to how they can turn those earnings into long-term financial progress.
This is not always easy. For many young South Africans, money has to stretch across transport, food, rent, data, education, debt and family responsibilities. So, even for those who are working, income is often under pressure right from the start of the month.
According to Sisandile Nkatu, Head: Deposits at Nedbank, this is why young people need practical guidance that helps them move from saving what they can to building wealth over time. “One of the biggest advantages young people have is time,” says Nkatu. “Even a small amount, invested consistently, can grow meaningfully over the years because of compounding. The earlier the journey starts, the longer that money has to work. That is why Youth Month is an important moment to shift the conversation from only earning money to also keeping it, growing it and using it to build assets over time.”
Compounding simply means that the growth earned by invested money keeps earning more growth if it stays invested. Over years, this can make a meaningful difference, particularly when someone starts early and contributes regularly, even in small amounts.
Nkatu says that a practical first step in going from earning to growing wealth over time is to separate short-term savings from longer-term investing. Money that may be needed soon, for transport, emergencies or an upcoming course fee, should generally remain accessible. Money intended for longer-term goals, such as further education, a first home, business capital or retirement, can be placed in investment or savings options that have more time to grow.
She points out that one accessible starting point for this is a tax-free savings or investment account, where all the returns and growth achieved are free from income tax, dividends tax and capital gains tax. Importantly, while the annual contribution limit for tax-free investments is now R46 000, it’s not essential for young earners to contribute the maximum immediately. What is important, however, is starting to put money into this type of savings or investment vehicle as early in your life as possible and then stay consistent and increase contributions as income allows.
Nkatu highlights that digital tools can also help make building for the future less intimidating. For example, Nedbank’s My Smart Money – available on the Money app – allows you to track spending, set budgets and create savings goals in one place. Then, when you’re ready to move from saving towards investing, Nedbank also allows investment accounts to be opened quickly and easily through the Money app or Online Banking.
For Nkatu, the starting point is making financial progress feel achievable, especially for young people who may be balancing irregular income, family responsibilities and rising everyday costs. “Young South Africans do not need complicated financial language or pressure to invest money they do not have,” says Nkatu. “They need tools and information that meet them where they are. Goal-based saving, simple digital access and education around options can help young earners take the next step with more confidence.”
For many, that next step may be as simple as setting up a small automatic transfer after
“Youth Month is a reminder that financial participation is about more than having a bank account or earning an income,” Nkatu says. “It is also about helping young people build confidence, make informed choices and use the money they have in ways that can create more options to build their wealth over time.”