DR SHEETAL BHOOLA
Recent national media reports have reiterated that many poor and middle-income households have been challenged by the increasing cost of living in South Africa.
It was reported by BusinessTech in November 2023 that middle-income earning citizens have additional expenses that primarily comprise inflated prices of necessities and resources such as education, health care and increased bank interest rates.
Many middle-class South Africans have not had salary increases that can adequately meet the new inflated costs and do not have the skills to manage appropriate financial expenditure changes to accommodate a lesser income.
South Africans are far more financially distressed than ever before. Central to the circumstance is the rising prices of necessities such as food and electricity.
Most citizens are forced to enact budget cuts, reform their priorities and question unnecessary expenses. Making the decisions is challenging, especially when there are expectations to contribute financially to extended family members’ woes.
Ultimately, sound financial decisions are complicated when one understands money management well and the required skills. In an economic climate like ours, the need for South Africans to be financially literate is a priority.
According to Statistics South Africa, youth unemployment in South Africa peaked at a high rate of 45% in the first quarter of 2024. The reasons vary but the central reasons are the shrinking economy and the lack of job opportunities within the formal sector.
Graduates, too, are unemployed, and many of the young individuals are forced to enter the informal sector to earn a livelihood. Recent research reports indicate that graduates are not employed immediately after their studies but a year or two after numerous applications and considerations of possibilities.
Some critics argue that most qualifications should be directly linked to industries to enhance employment opportunities. Unfortunately, this is not the scenario in South Africa.
Research has illustrated that poor financial literacy is a core reason for poor monetary decisions, lack of financial planning or security and malfunctioning micro and macro entrepreneurial ventures.
Therefore, financial literacy must be prioritised in the school curriculum. It would give a young citizen a sound understanding of how to manage money.
Financial literacy is detailed and many might argue that it is a lifelong process, but it should, ideally, begin at a young age. This will also teach a culture of personal financial responsibility, work ethic and a consciousness of how to spend hard-earned money. Every individual needs the skills, knowledge and confidence to manage their finances effectively.
In addition, several South Africans have been victims of banking and money theft. The number of digital financial scams, pyramid schemes, phishing, deposit ATM scams, fake Facebook give-aways and other illegitimate financial business initiatives make effective financial education even more important.
The Organisation for Economic Co-operation and Development indicated that its 2021 research study revealed that only 42% of our adult population is financially literate.
More than half our population needs help understanding the financial concepts of savings, investments, bond repayments, inflation and interest rates. Amid the rural areas and low-income accruing groups of South Africans, financial concepts such as various means to bank, save and access money remain a considerable challenge.
Financial education is one avenue to alleviate poverty in South Africa and provide people with the skills to manage their incomes. The Department of Education should stipulate that financial literacy be mandatory as we head towards new governance and seek to develop policies and programmes that can create all sects of our society.
Some schools offer financial literacy but we still need to determine if it is comprehensive and adequate. More importantly, it is problematic that the subject is provided as a choice rather than as a mandatory school subject.
The fact that some schools offer the subject and others do not. once again, perpetuates the inequality in our country. Some have access to a far more holistic and beneficial form of education, whereas most do not. A regulation in this regard is a priority for all schools. Institutions that educate teachers must also peruse the necessary adjustments in their teaching curricula.
To improve the status of financial literacy, the new government should facilitate and engage in financial literacy programmes for communities and organisations across South Africa. This would be particularly effective in low-income group suburban areas in cities and rural areas.
Technological advances could also facilitate financial education effectively, primarily through digital media platforms and accessible televised programmes. This platform is accessed mainly by youth and adults and, therefore, could be an interim measure to aid South Africans in becoming financially literate.
With the change of the newly merged government, South Africans are looking towards a better future and an improved quality of life overall. This includes better municipal delivery of services and resources, minimised criminal experiences and corruption, and better management of national resources and finances, but central to enhancing an individual's quality of life are skills and knowledge to effectively manage their finances.
Dr Sheetal Bhoola is a lecturer and researcher at the University of Zululand, and the director at StellarMaths (Phoenix & Sunningdale).
Daily News