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 it’s no surprise that there’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.com’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 – FINALLY – financial literacy.

It’s no wonder that as South Africans, 70% of adults are in debt when ‘financial literacy’ 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 don’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, we’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.

Ask us about our tailored programmes kathryn@moneysavvykids.co.za

Creating Money Savvy Kids for the future

Did you know that 70% of income earning South African’s are in debt? And with the arrival of the Corona virus and downfall of our economy, what then about the financial freedom of our children?

Poor financial decisions can have a long-lasting impact on individuals, their families and society. The causes of the recent financial crisis are complex, but the lack of financial literacy is certainly one of the aggravating factors leading to ill-informed decisions on home loans and credit purchases. Low levels of financial literacy have also been associated with a lower standard of living, decreased psychological and physical well-being and greater reliance on government support.

Financial education can make a difference, says Kathryn Main, Managing Director of Money Savvy Kids. “It can empower and equip young people with the knowledge, skills and confidence to take charge of their lives and build a more secure future for themselves and their families. Supporting financial education can be viewed by the main public, private and civil stakeholders as a critical long-term investment in human capital.”

While the majority of people do not ever rise to a point of complete financial freedom in their lifetimes, some manage to break the mould. Once they reach financial comfort, the aim is to keep the money they have made, and hopefully make it work for them so that it can be of use to future generations. This can only be done by harnessing financial intelligence.

MSK is revolutionising the way financial knowledge is disseminated to younger generations of South Africans. It is questioning the traditional schooling system, which currently produces more followers than leaders. It instills within children – from a very young age – the problem-solving and critical thinking skills they need to make financial decisions now and in the future, using the analytical skills they learn through the program.

“Financial literacy is a cornerstone of prosperity and security. It builds confidence and knowledge in the lives of individuals and the country as a whole. We cannot address the issues of financial inclusion and equitable and sustainable socio-economic development without addressing financial literacy,” adds Main.

About Money Savvy Kids

Born out of the need to teach our kids that money is something to be understood and respected, Money Savvy Kids (MSK) is the beginning of the end of financial mismanagement and misunderstanding. By combining financial education courses for kids through external school curriculum programs as well as financial education courses online, MSK makes learning easy through fun ways to teach kids money matters.

 For more information on Money Savvy Kids visit http://moneysavvykids.co.za/

Empower your kids with financial literacy

The world has been thrown off its centre due to Covid-19 and the implications thereof. Our country is in a state of emergency and lockdown has resulted in jobs being lost, salaries being cut, personal finances being destroyed and an economy that is damaged. However, despite these circumstances we still have to find a way to manage our finances, take care of our families and ourselves and move forward.

Looking back to January this year, what do you wish you had done differently? For many people it comes down to finances. They wish they had saved more, built an emergency fund or possibly invested in a mask or hand sanitizer manufacturing company. I guess that is how we will always feel as human beings. We will always look back and wish we had known better and done better. Or could we do things differently?

What if you could give your children this advantage? What if you could teach them how to manage their personal finances better so that they do know better and do better?

Our personal financial situations and how we deal with this pandemic are all life lessons we are teaching our kids even if we are not communicating it to them verbally. Now is the best time to start talking to your kids about money and to start helping them become financially literate.

Candice Preston, a Money Savvy Kids licensee, knows the value of being financially literate from a young age. Her mother taught her to save and invest and she found herself able to survive during lockdown because she had built her emergency fund and had cash available to capitalise on opportunities that came her way. / As a mother to 3 sons Kathryn Main CEO of the Money Savvy Brands knows how important it is to equip todays kids and teens with valuable financial literacy education to ensure they are financially successful adults.

So where can you start to help prepare your children for an uncertain future and give them every chance to achieve success?

Firstly, start by talking to your kids about money, openly and honestly, and show them what is happening to your finances and expenses in this current situation. My Mom and I had frequent candid conversations about money. She shared the mistakes she had made and her regrets about not saving enough. Her honestly never made me see her in a bad light but rather made me respect her more. She is human and I admired her for her honestly and her eagerness to teach me to do better.

Don’t be afraid to speak with you kids. Remember that experience combined with knowledge is the best way to equip your kids to face an uncertain future with more confidence. Teach your kids about fixed and variable expenses and talk to them about options for cutting variable expenses. Challenge them to find creative ways to save money like saving R1000 on your food budget.

It is good to talk about the family values and how they influence behaviour. Our family values will dictate how we utilise our money so work together as a family and set some goals that everyone can work towards achieving.
It is important to remind children that majority of wealthy people became that way through hard work, saving and investing. Only a small amount of people become wealthy by being Youtube sensations. When children can see that it is achieve bale, even if it doesn’t look glamourous, it enables them to work towards achieving it.

Start today by teaching your kids good financial habits that will help them reach their financial goals. These include creating a side hustle, managing income, saving (a minimum of 15% of everything earned) and investing money to have it work for them. Take them into the bank and open a bank account for them with a saving pocket and set up an automatic transfer to save that money. Teaching them to “Pay themselves first” is one of the most valuable lessons you can give them. Use online sites like www.easyequities.co.za to teach them how to invest and save that money into a tax-free savings account.

Ask your kids to come up with solutions to solve real problems you and people you know are facing right now. You are helping teach your children how to think and give them the space to think their ideas through. You can guide them and facilitate them in their thinking process but allow them to work through ideas.

You can make a big difference in your children’s lives and empower them to know better going forward no matter what happens in our world. I thank my Mom every day for teaching me about finances from young and I am now living proof that by knowing better I was able to do better and this has resulted in me living better today. This could be the best gift you give your kids.

5 Tips to Financially Survive Corona

We all know that life during COVID 19 is filled with countless unavoidable worries of the financial kind. Some may feel it more than others, but we all feel it non-the-less. We are losing our jobs, taking salary cuts and closing our once thriving business. Basically, we go into level 1 of survival mode when it comes to our finances due to the crunch we feel. Here are 5 tips to get you to the next level of survival mode.

  1. Know your credit rating
    Your credit rating is like a meal ticket. If it’s good it will get you the best 3-course meal money can buy but if it’s bad, you can only get a single meal a day that is less than satisfactory. Your credit rating is information that lenders use when deciding if they want you as a customer. The higher your rating, the better your chances are at getting the financial assistance you need for all the important things in life. If you do not know what your credit rating is, there is no time like right now to get the information. By seeing your rating, you can see where you stand and recover if your rating is below par.
    Find out what your credit rating is for free here https://www.clearscore.co.za/
  2. Get your debt under control
    When you are in a hole you need to stop digging. The same applies to your debt. Stop unnecessary spending. I did an interesting exercise recently and took 3 months’ worth of bank statements and highlighted my spending pattern. On average I was spending between R4000 – R6000 a month on frivolous spending with nothing to show for it. Eating out, buying snacks from the petrol station, impulse purchases and retail outlets, overspending on my food budget etc. Take a high lighter and look at your spending. See how you can cut back on those unnecessary card swipes every time you go somewhere.
  3. Get on switching
    ‘Switching’ is the eighth wonder of the world, yet people never do it due to their loyalty (and because it takes forever to do). But you can cut down your expenses by hundreds of Rands when you actually stop being loyal to your current providers. A depressing fact is that companies typically give the best deals to new comers. Interestingly, the longer you are with a provider, the higher your premiums are likely to be. So, switch and not only get a cheaper deal, but a better one. Who doesn’t want car insurance, entertainment, or homeowner insurance for less? Review your insurance providers, cell phone providers, bank charges etc.
  4. Start building an emergency fund now!
    The budget may be tight this month but that will change as the year progresses. Building an emergency fund as soon as you can afford it is imperative. Things can and do change in an instant, including your financial state. So, having a financial safety net is the only way you can solve the issue without getting into unexpected debt in 2020. Its never to late or to early to start saving. Even R100 a month to start with. Its never too late or too little to start saving! Save now!
  5. Create a budget
    Money is tight but the family’s needs must be met. Knowing exactly how much is coming in and how much is going out is the best start to reduce your financial woes. All you need to do is get all your financial records together and see where you can cut back without affecting the family’s necessities “basket.” And remember to add “savings” in your expenses column. This is a great way to get the kids involved and teach them how to save on expenses and budget.