According to a recent article on the FA News website, South Africans still have a tendency to be poor savers while at the same time being large borrowers. The conclusion is that the financial services sector needs to increase its efforts in order to try and reverse this position.
Statistics gathered by the Old Mutual’s Mass and Foundation Cluster indicate that South Africa’s metro working population uses approximately 19% of their earnings to repay debt. They also show that only about 48% of the 24-million people who have incurred or taken out debt are able to keep their payments up to date.
The problem stems from a lack of knowledge
Although the cost of living is on the rise, this is not the prime cause of the indebtedness and the failure to make payments on time. The underlying reason is the fact that these people suffer from a lack of basic knowledge about how finance works, and more importantly, what incurring debt can do to those who are ill-prepared.
A lot of people are too afraid to attend classes to educate themselves about personal finance. Many course simply cannot afford the cost of courses. There is, however, an alternative solution. You can teach yourself. As well as being much cheaper than enrolling on a course, it also does away with the stigma that many people are scared will be attached to them if they attend classes.
DIY education through reading
The alternative is reading the right books. The question that first springs to mind in most people interested in this option, is what books? Fortunately, you can find help with this online. An example is the Wonga ZA website and their page on “Recommended reading for personal finance.”
Reading is one of the best ways of educating yourself. It’s something that you can do in the privacy of your own home, away from prying eyes, and it is also quite easily affordable; especially when you take into account the benefits you will reap from the exercise, regarding your future financial situation.
Another great thing about educating yourself in this way is that it is something you can do at your own pace. Not only that, but you can also do it at times that suit you. You don’t have to be regimented about having to go to classes at specific times of day or night.
Improving financial literacy from an early age
We already know that one of the fundamental reasons for the increasing trends here in South Africa towards credit and lending, is the lack of financial literacy and this is particularly evident in the country’s youth. By starting financial education at an early stage in life, we can prevent the problem escalating in the future.
Self-education within the family unit is an ideal way of providing this learning. In addition, it will also help to build a financially literate culture as our children pass this knowledge on to their children in later life. In this way, together, the population can contribute to constructing a better, more financially aware South Africa nation for the future.