Financial literacy is the key to a bright future

Wednesday, June 26, 2013

Pretoria - Keeping up with the latest trends is key to having the latest gadgets and hottest designer garb. But to be able to afford that, together with gourmet food, one has to be financially savvy, and nobody understands this better than South African youth.

This month, South Africa commemorated the events of 16 June 1976, where youth demonstrated against the apartheid regime. The youth had had enough of segregation and apartheid brutality.

Just as the youth of 1976 fought for freedom, the youth of a democratic South Africa realise that in the journey to achieving goals and dreams, financially literacy is key to living the life of one’s dreams.

For three consecutive years, the Johannesburg Stock Exchange (JSE) has run the National Youth Financial Literacy Day (NYFL), together with various financial institutions in the country.

The workshop, held with the aim of increasing financial literacy among the youth, was targeted at high school pupils, university students, young entrepreneurs and other youth.

“Young people who understand money and understand how to use money and have knowledge about money are going to prosper. There’s no doubt in my mind about that,” National Treasury’s chief director for financial sector development, Ingrid Goodspeed, said at this year’s NYFL on 13 June.

Fostering a culture of saving

South Africa continues to rate poorly in terms of savings among adults and youth.

The financial literacy baseline study, which was undertaken by the Financial Services Board (FSB) in the second half of 2011, revealed several statistics about young people aged 16 to 19.

The study found that the majority of young people would prefer to spend money than save it; that the majority of young people never enjoy dealing with financial matters and that young people are least likely to stay within their budgets.

The FSB is an independent institution established by statute to oversee the South African Non-Banking Financial Services Industry in the public interest. The board is committed to promote and maintain a sound financial investment environment in the country.

“It makes sense to start [saving] early and avoid debt later in life,” 19-year-old first year student, Donum Mandizvidza, said.

The BSc Mathematical Sciences student was among the youth who attended the Pretoria leg of the NYFL.

Goodspeed urged the youth to steer clear of FOMO (the fear of missing out) and to know the difference between needs and wants.

“Financial literacy is not something you acquire in a split second, it’s continued over time. Government and institutions are also working together to improve financial literacy not only for youth but for all our citizens,” she said.

Demystifying investment

The JSE is South Africa’s only full service securities exchange. It connects buyers and sellers in four different financial markets namely equities, equity derivatives, commodities derivatives and interest rate instruments. The JSE is among the top 20 largest equities exchanges in terms of market capitalisation in the world.

Waldemar Budeli, retail development officer at the JSE, said that the notion of the JSE being seen “by many as a complicated process” can be remedied by education.

To educate the learners and the public about the stock exchange, games have been developed to get people to understand the workings of the JSE.

The JSE/Liberty Investment Challenge is a game that aims to teach learners and students about investing in the JSE and the larger role that such investment plays in the country’s economy.

The Challenge helps those participating to learn about the fundamentals of investment strategy and encourages them to research and strategize issues surrounding the trading of JSE-listed shares.

Each team is given an imaginary sum of R1 million to invest in JSE-listed shares. Their performance is tracked and measured in a competition against other teams taking part in the Challenge. The top performers win prizes.

The game starts every year in March and ends in September and can be accessed on

The JSE is also running the Virtual Trading Game, which is an online trading competition that runs for 90 days. It aims to teach the public about investing in the JSE.

The game helps those participating to learn about the fundamentals of investment strategy and encourages them to research and strategize about trading shares listed on the JSE.

Each participant is given an imaginary sum of R1 000 000 to invest in JSE-listed shares.  The game, whose registration concludes at the end of June, can be accessed on

Goodspeed said the youth of today are more clued up about the importance of financial freedom.

“I think they are a lot more clued up than that social strata that never had access to any literacy training at all. Currently, there is a fair amount of knowledge that is being imparted at schools, which we never had access to at schools. At school, we were not taught about finances, they have access to that,” Goodspead told SAnews.

Because youth were being taught about being wise with money, they were helping their parents in being money wise.

Rands and sense

Mandizvidza, who plans to become a quantitative engineer, said he was “generally good” with his finances, but that most young people found it hard to save and would rather spend their money and follow trends.

St Mary’s DSG pupil, Beryl Torthe, said the youth had a tendency of being reckless with money.

“I do take business studies at school so I have a business approach to life that my parents have always instilled in me to save, but I do think that as a generation we do tend to be reckless with money.  [Sometimes], it is not even that we are reckless [with money], it’s because we are uninformed about financial decisions,” said the 18-year-old matric pupil.

Torthe, who plans to study economics abroad after completing her matric, said there was a culture of spending money among the youth compared to the older generation.

“We are a shallow generation. The older generation had struggles and they learnt to appreciate the value of money.  When our parents were growing up, it was about saving up for something and appreciating it when you have it. Our generation has everything now; we are used to getting everything whenever we want it.  The world is at our fingertips,” she said.

Msa Gaxo, an associate at a leading law firm, said it was interesting to note the number of black youth that were attending the NYFL to learn about investing.

“I think in the world of investing, generally black people in South Africa have been under-served,” he said.

Investing was about growing one’s money and it did involve the risk of temporarily losing money.

“Investing is growing your money. It is not gambling, it is growing your wealth. There is a risk of temporarily losing your wealth. You have got to be patient,” said senior manager for Market Development at the JSE, Nicola Comminos.

National Credit Regulator (NCR) education officer, Alfred Matsimbi, appealed to the youth to avoid being over-indebted. Over-indebtedness stemmed from a lack of financial and credit knowledge. He also urged the youth to avoid peer-pressure, which could force them into being indebted.

KwaZulu-Natal hosted the first leg of the NYFL earlier this month. -