Why are we in such debt?
The internet loves making lists of things, from top 10 beaches you have to see, to the top 10 restaurants in your area. So itâ€™s no surprise that thereâ€™s a list of the top 10 reasons why people fall into debt. Some are fairly obvious, some are a little more excusable and one is absolutely ridiculous.
Bankrate.comâ€™s list of the top 10 leading reasons for debt starts off with reduced income/savings. That stands to reason. Next up is divorce, followed by an important one, namely poor money management. The list goes on through unemployment, gambling, medical expenses, saving too little, no money-communication skills, banking on a windfall and finally, yes â€“ FINALLY â€“ financial literacy.
Itâ€™s no wonder that as South Africans, 70% of adults are in debt when â€˜financial literacyâ€™ comes in at number 10. It begs the question, if financial literacy was at the top of the list, would there be a list at all? There are glaring inadequacies in the education system, from junior school right the way through to tertiary education that does not include any sort of formal financial literacy.
The lynch pin of education is that, when done correctly, can eradicate an abundance of unnecessary shortfalls when education is lacking.
There is no use in trying to solve our financial problems if we donâ€™t understand finances in the first place. Our lack of financial literacy in this country breeds a society that is constantly playing catch up with their finances and, worse still, putting out fires constantly.
Until we see a shift in paradigm that sees financial literacy (or lack thereof) as the number one cause for debt and financial instability, weâ€™ll spend our lives reading about the top 10 beaches to visit, as opposed to going to see them for ourselves as a result of our financial instability.