By Velani Ludidi
If there is one thing that the global pandemic taught us it is how important it is to be more financially prepared for the unexpected. Although this was a lesson learnt the hard way for many people during 2021, society is still very much geared towards seeking instant gratification, and South Africans are notoriously materialistic and steeped in debt.
The younger generation can grow and be more financially savvy if they are taught at a young age. Christelle Louw, advisory partner at Citadel, said children should be encouraged to start saving at an early age.
“Parents normally want to provide their children with the benefits and advantages they never enjoyed themselves, and unwisely lean towards material things and spending a lot of money on their children’s instant gratification.” But she said the biggest gift they can bestow on their children as well as on their own future is the long-term rewards that grow over time.
“They should be inculcating their children with principles of wise financial management, getting them practically involved in budgeting and saving, demonstrating the gains that are made and the solid foundations being built for their futures.”
Louw recommends a savings plan to which parents could contribute the same amount as the children save.
“It is encouraging to see the amount grow and to start understanding what the concrete benefits of these savings will be down the line. Counter the glitz and glamour to which children are being constantly exposed through social media and celebrity marketing, by explaining the difference between being rich and being wealthy.”
She said being rich nowadays is mostly spending of cash flow, looking the role and seeking the limelight, while wealth is the accumulation of assets, which is less spectacular and showy but has solid and reliable results.
“Children can learn from an early age that it is not the flash-in-the-pan status that counts but the long-term stability. You could do online searches on successful investors such as Warren Buffett, or even make a collage of the goals you want to achieve with your children. And along the way, remember to include small rewards for aims attained to encourage your children. Teach them basic principles: don’t spend what you don’t have. Delay spending and plan ahead. Reward yourself when you have reached a financial goal.”