On Heritage Day, millions of South Africans celebrated their cultural wealth as a nation, as well as the diversity of their beliefs and traditions. But sadly the financial legacy inherited by future generations is often overlooked.
Financial literacy refers to the ability of making sensible decisions about financial planning, asset creation, and retirement savings. However, many people, particularly the youth, have a limited understanding of personal finance.
Money talk is very much a taboo topic amongst many South Africans. Financial education is all too often left out of the national curriculum, even though it plays an important role in adulthood. Healthy financial habits such as budgeting, saving and investing are basic life skills that are necessary to build a financially secure future generation.
“Creating a financial legacy that can help you and your family sustain wealth hinges on one crucial factor and that is financial knowledge,” says James Williams, Head of Marketing for short-term lender, Wonga. “It is important to educate young people on how to manage their money.”
Williams provides some useful tips on how to teach children about these money matters:
- Involve your kids in daily financial tasks. This can include paying bills and managing their savings. Talk to them about setting financial priorities and the importance of saving for the future and offer them opportunities to weigh in on the pros and cons of various household purchases.
- Effort and reward. Once they are old enough, consider paying them an allowance for helping around the house so that they can begin practicing their own money management skills. Simple rewards systems such as earning money from washing the family car over the weekend or cleaning the pool can be a great way to reward good behaviour, better school results and completing household chores.
- Introduce healthy money management habits. Encourage them to start saving for the things that they want to buy as well as to share their financial goals. You can then work together to establish a plan to achieve them.
- Explain the difference between want and need. This means setting a good example for them to follow. By going on extravagant shopping sprees when you can’t afford to, is not going to teach your child restraint.
“As we get older, we all dream of leaving behind a legacy of generational and cultural wealth. We want our children, their children, and their children’s children to remember the values we worked our whole lives to instil in them,” continues Williams. “We want them to be financially stable and have better lives than the generation before. Improving financial literacy is one way to end the vicious hand-to-mouth cycle affecting many in South Africa.”
“Passing wealth-building habits on to your children is an invaluable way to ensure their success and financial wellness,” he concludes. “A legacy of saving, investing, wealth preservation and responsible spending will go a long way to ensuring that your financial legacy truly lasts, and does not end with the next generation.”
Visit the Wonga Money Academy for tips on how to learn more about how to better understand the basics of financial management: www.moneyacademy.co.za .