19 April 2017: Did you know that 70% of South African’s are in debt? And with the announcement of South Africa’s new junk status, 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.
Money Savvy Kids (MSK) is not just a product. It is a pathway to developing mind-sets that will ensure South Africa’s children not only work their way out of poverty, but that they have the tools to stay out, says Main.
As Robert Kiyosaki, leading author on financial literacy, explains in his books, developing one’s financial IQ does not guarantee that one will never face financial difficulties. It does, however, give one the tools to solve money problems when they do arise. And solving money problems ensures sustainable long term financial success.
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.
MSK promotes, amongst the youth, knowledge attitudes and behaviours required to be financially independent. This is critical to South Africa’s future because each person’s informed financial decisions help shape the country’s economy into the powerhouse it has the potential to be.
South Africa is a buy-now, pay-later society. The effects on young people’s financial literacy are thus characterised by the same behaviour patterns as parents and society as a whole. These are high credit and high consumer behaviour with very little savings, and in turn high social risk behaviour. MSK is working to change this disastrous pattern.