WeeklySA_AdminBUDGET : People must be taught the importance of saving money By Thuli Zungu
The past 18 months of having to live under locdown regulations due to the CovId – 19 pandemic, has been a financial test for many consumers especially those who have a bad relationship with money.
Unemployment coupled with food hikes have also added misery in our lives as most people languish at home with no income and living above their means.
Consumer Eye has also noticed that some consumers who have been retrenched are quick to spend their money renovating their homes and have now exhausted all their pension funds with no hope of getting new employment.
Doreen Nyembe, 53, of Zola North in Soweto volunteered her experience when Consumer Eye met her at the Zola ShopRite this week. She had run short of money to buy all the basic food items she needed when she asked for help. She spent R700 000 refurbishing her house within six months, she says.
“Money can fool you, but my only consolation is that I have a house I always dreamt of.” Nyembe says when she grew up her parents always told her they did not have any money each time she asked to buy things including school nec- essities. To compensate for all those disappointments of not having things she always wanted, she has now spent all her pension pay-out she thought might last her for the next five years while waiting for the R500 000 she invested early this year. Her parents never taught her how to budget, says a stressful Nyembe.
This became a vicious cycle of bad mone habits, as she has not taught her two children how to save either.
Kabelo Teme of the Credit Ombudsman says some of the financial or money lessons were inherited from behaviours in our own households as we grew up.
“Whether they were all good is at times ques- tionable. But we can teach the future generation so that they may avoid the mistakes that we in- herited,” she says. Teme says if you grew up in a home where budgeting and planning for any ex- penditure was a norm, then you are likely to have also inherited this habit and be able to teach your children. “Ideally, this would be in a perfect world. Some of us were never taught about the importance of saving. Most of us grew up in homes where our parents would depend on stokvels.”
Teme added : ‘’ This is another great method to save. Teach your children about the stokvel you are involved in and how it works. Teach your children that credit is not free but is money they need to pay back with interest on the agreed date so that they do not find themselves being listed as a non-payer at the credit bureaux.” Teme says many consumers still do not under- stand what the functions of the credit bureaux are or how their credit profile and credit score works. “They do not even take advantage of the free cred- it profiles they can receive from the credit bureaux every year,” she says.
“Most people still do not want to budget because they think it is not necessary. We need to teach our children to not only be technologically, but also financially savvy.’’
Teme also says we should make financial discussions a habit with our children or at our family meetings for their better future.
She gave the following tips :
· Teach children how to save and how to use credit positively in a practical way and at an appropriate age.
· When giving them an allowance, teach them that if they save a portion of it every month you will give them 10% interest of the whole amount at the end of the year. Similarly, if you borrow their money, you will then pay it backwith an interest of 5%. In that way you teach them about credit too.
· Teach them that if you don’t pay it back at the agreed date it will attract interest and they should write it down in a file to track your payments and label you as a late payer.
· They can use that information in your file to decide whether they will lend you money in the future or not.
· Already you have taught your child about the relationship between a consumer and a credit provider and have added a lesson about the credit bureaux keeping consumers’ credit pro- files.
· Know where your money is going or what you want to achieve with it.
· Have a timeframe of when you would like to achieve these plans and stick to them. Teach your children the same strategy.
· Deal with bad spending habits – Write them down and find alternative ways to avoid spending.
· Draw a monthly or weekly budget so that you do not go off track.
· Leave your children with assets and debt – building wealth for our children should not be the ultimate goal.
· Your retirement is your responsibility – our children should not be our retirement plan. Get financial advice on how to secure your retirement so that you may maintain your current lifestyle or have a better one.
