In an era of technological advancements and easy access to financial systems, educators are increasingly highlighting the significance of teaching teenagers and young adults about responsible financial behaviour and improving their financial literacy.
Divine Muland, a mathematics teacher at Centennial Schools, has emphasised the need to address the lack of financial literacy among young people and its potential consequences.
According to the findings of the Momentum Science of Success Insights report, young people often display overconfidence in their financial abilities while possessing low levels of financial literacy, she indicated.
The report also reveals that a significant number of South Africans suffer from financial difficulties due to poor decision-making and an overall lack of financial knowledge.
Muland says the current generation, known for its technological prowess, approaches the world of money in a distinct manner compared to previous generations. The ubiquity of mobile phones among teenagers has facilitated their engagement with games and applications that involve monetary transactions. However, according to her, this increased accessibility to financial systems also exposes young people to potential financial traps.
“Our grade 7s are busy with an entrepreneurship game simulation which is teaching them about business, and the fundamentals of financial literacy. Our Grade 9s also do cryptocurrency. With the way the world is moving, learning about crypto makes them more aware of the financial market and the risks associated with it,” she explains.
Tips for guiding young individuals towards improved financial literacy:
• Focus on the essence of financial literacy: Financial literacy revolves around utilising your resources wisely to build a secure future.
• Set SMART (Specific, Measurable, Achievable, Relevant, and Time-Bound) goals: Muland advised that trying to tackle financial matters too quickly can lead to being overwhelmed accompanied by discouragement. • Save: No matter the amount: If you save in the right places, a little can go a long way. Open a savings account and try and save at least 5% of any money you receive,” Muland advised.
• Distinguish between saving and spending.
• Tackle debts systematically
• Develop a budgeting habit:
By implementing these tips, young individuals can embark on a journey towards improved financial literacy and build a solid foundation for their financial well-being.
“Financial literacy is the key to a good relationship with finance, and the earlier we start teaching and learning this, the better,” Muland said.
Where to save your savings:
Francis Marais, product director at Morningstar Investment Management SA emphasised the importance of starting by determining the duration of your savings goal.
For short-term goals like building an emergency fund, it is advisable to choose a product that allows quick access to your money, while for long-term goals such as retirement, products that offer higher returns over time are recommended, he stated.
Another important consideration, is understanding the tax implications associated with different savings and investment products. Each product may have unique tax benefits, so it is crucial to select a product that aligns with one’s needs.
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