It is hard being a young person in South Africa right now. Covid-19 has complicated all our lives and is putting the squeeze on the economy (not just our social lives).
Statistics show that youth unemployment is now close to 75%.
This makes it really hard for young people to be positive about the future. Applying for job after job and being turned down repeatedly is mentally very tough and can make you doubt yourself.
In interviews with young people here is some of the top comments:
WHAT IS THE BIGGEST FINANCIAL STUMBLING BLOCK FOR YOUNG PEOPLE?
- Choice overload is a critical problem. South African youth have a plethora of options available, and don’t know what to choose.
- The financial advice that we get from social media does not come from qualified experts, and this causes confusion.
- Materialism is one of the biggest challenges that young people face. Young people are obsessed with expensive clothing and smartphone brands.
WHEN IT COMES TO YOUR FINANCES, WHAT DO YOU WISH YOU HAD LEARNED SOONER?
- I wish I had started saving and budgeting earlier, and learnt about all the different special youth savings accounts that help you maximize interest and save on fees.
WHAT FACTORS INFLUENCE YOUR FINANCIAL DECISIONS?
- I am a cautious buyer. I try weigh up my options before I make a purchase.
TOP TIPS FOR YOUNG PEOPLE
Divide Household & Entertainment Expenses
If you’re a student, or struggling to make ends meet, it’s highly likely that you’ll be living with family or friends. Apart from learning how to adapt to their personality quirks, you’ll also have the challenge of managing joint
Tip: You need to learn to divide money between flat mates so that no-one feels disgruntled. You can check out apps like Splitwise, to ensure you split bills, not friendships.
Make a Budget and Stick to it.
Do your best to draw up a budget and stick to it. With so much online advice these days, the excuse of being clueless about how to manage your money is no longer valid.
Tip: Debt-Free has a free budget calculator here.
Tip: Try the envelope method where you have an envelope for each expense category (like rent and entertainment), then put money to each. Some bank accounts let you do this digitally (pockets).
Pay Off Your Debt ASAP
It’s very easy to fall into a debt trap when you have a mix of credit cards, overdrafts, outstanding bills and fines. It happens fast.
Tip: Deal with your debt sooner not later. The longer you leave it the worse it will be.
Don’t Forget You Have To Pay Tax
If you’re taking on freelance or contract jobs, your employers may deduct a flat 25% and pay this to SARS. Other clients may prefer to not get involved and will pay you the full amount. The bottom line is that, whether money is deducted by the client or not, you are liable to pay tax.
Tip: Save important documents proving the expenses you have doing your work. You should be able to deduct most of them.
Tip: If you are not familiar with tax stuff ask someone who is or consider paying a professional. It can save you a lot in the long run.
TAKE YOUR TIME
The one advantage young people have is that time is on your side. Don’t feel pressured to have the lifestyle of the rich and famous or even your parents overnight.
If you are prepared to take your time and not get into too much debt early on, just to try and have a fancy lifestyle temporarily, then you can avoid a lot of trouble down the line.
If you share accommodation with others then make sure everyone knows who will pay for what to avoid possible conflicts.
Make and stick to a budget that allows you to pay your taxes, expenses and reduces your debt rather than lets it grow.
And remember, avoiding debt now is a better investment in your future than trying to guess which crypto coin Elon Musk will endorse next.