Are You Financially Literate?

The Importance of Financial Literacy in South Africa

It’s rude to talk about money, I know, but are you financially literate?

I’m the first person to admit that I don’t know enough about financial literacy to advise on the subject.

However, I think it’s very important that South Africans have a conversation about financial literacy because we trail behind the global average for financial awareness.

Why Financial Literacy Matters

I’ve noticed when I started talking about cancer with people, a lot of people told me they don’t have medical aid. Medical aid is expensive but I can tell you that the cost of health care is so much more expensive than if you don’t have medical aid. So, get yourself medical aid.

It’s a pity that we aren’t educated about financial literacy because the only thing harder than not having enough money is not having any money.

We never had this topic brought up in school, it was certainly never discussed in my family- in fact, we are often told we don’t talk about money. So where is anybody supposed to learn about financial literacy?

Taking Responsibility for Your Financial Planning

Unfortunately, financial service providers advertising on television are only selling their financial products without trying to educate South Africans about financial literacy.

Your bank, your insurance company, any financial service provider is probably not the best person to give you objective advice. They can talk to you about their product, but maybe not necessarily give you the advice that would suit you. And, I know, it’s a boring topic unless you have some skin in the game.

I would appreciate more content geared towards educating people about financial literacy in South Africa.

I’m terrible with maths and science and I can’t really talk about financial literacy or get excited about it than what I might about a chocolate ganache or a rose water reduction. But let’s start talking about financial literacy, if not for our sake, at least for our children’s sake.

If you ask, why is financial literacy so important? Firstly, it allows one to make informed decisions, understand financial options, and make smarter choices.

Understanding Budgeting and Saving

I would like to know more about budgeting and saving. How do we manage expenses? How do we create budgets? And how do we build savings?

I find saving such an interesting topic. Some people earning R10,000 a month are proud that they are saving R100 a month because at least they are saving something.

However, if you ask them, what are they going to do with those savings? Are they going to have enough if they get retrenched? If they are retired, have they saved enough?

The answer is probably not.

Debt Management and Financial Independence

Looking at debt management, I really wish I understood credit and loans and debt repayment better at an earlier age. I thought I was so fortunate that I could afford store credit cards with six months to pay. Unfortunately, I got myself into a lot of trouble because I didn’t know how to manage them.

One of the best decisions I made in later life was when I cut up all of my store credit cards. Unless I had money on my debit card or my (bank) credit card, I couldn’t allow myself to buy anything. That’s when I realized that nobody needs to spend six months paying off clothes that were probably never in fashion in the first place.

Take savings one step further, it’s not just about saving the pennies and the pence, it’s about creating enough wealth that you can create investment packages and to secure your future so you’ve got financial independence.

I think financial literacy also goes one step further. It teaches you to avoid financial pitfalls, recognise scams, avoid high-interest loans, and learn how to manage your risk.

The Dangers of Financial Pitfalls and Scams

BTW: Allow me to digress a bit here… There’s a critical area where public education is still lacking: recognizing and avoiding spam links. Time and again, individuals fall prey to malicious phishing scams. A common scenario unfolds like this: someone receives an email appearing to be from their bank or any financial service provider, prompting them to click and log in. They assume it’s genuine because it claims to be from their bank/FSP.

However, this is precisely the trap we must teach people to avoid. If you receive correspondence from a financial institution asking you to click a link and log in, treat it as suspicious. Never click on such links or provide personal details.

Instead, follow these steps:

• Delete the email immediately.
• Open a new browser and directly log into your financial service provider’s secure website.
• Verify the website’s encryption and authenticity.
• Check for any legitimate correspondence from the institution.

By taking these simple precautions, you can significantly reduce the risk of falling victim to phishing scams.

Remember, even if a website is hacked, following these steps will help you stay safe.

Criminals will bend over backwards to try make everything look as authentic as possible – unlike the South African police who I question if they are equipped to deal with complex cybercrimes.

So many people are actually being scammed out of their savings, scammed out of their money, scammed out of their investments. It can be as simple as sending somebody a phishing link.

So this is what I’m looking forward to discussing financial literacy.

Financial Literacy Statistics: A Global Perspective

Some scary statistics about financial literacy:

• When it comes to global financial literacy, only 33% of adults are considered financially literate. 37% of men and 29% of women.
• If you look at regional financial literacy, the first world countries do incredibly well. Canada, America, and Europe leading in the top 50 percentile.
• Surprisingly, Asia drops down into 45%, Latin America drops down even lower, and unfortunately, Africa drops down into the lowest percentiles for financial literacy.

Financial literacy is a topic that we need to talk about in South Africa.

People often make excuses about taking responsibility for their financial planning but when you don’t have an income, you realize very quickly there are so many things that you could have done without.

Let’s Talk About Financial Literacy

If you have any questions about financial literacy, I will help find the answers. If we can find a panel of experts, I will happily interview the right people to give South Africans the information that they need.

Somebody asked me how am I going to talk about financial literacy when I am probably one of the most financially illiterate people on the planet.

I replied that maybe you need somebody who doesn’t understand financial literacy to ask the right questions and simplify complicated financial ideas into understandable soundbites that everyone can understand.

Considering, that so many people don’t understand financial literacy, it’s probably going to do more good than harm to get the conversation started around financial literacy.

Are you financially literate?