Navigating financial struggles in South Africa: a call for personal finance education

Mabila Mathebula. Picture: Supplied

Mabila Mathebula. Picture: Supplied

Published Nov 12, 2024

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Most South Africans are engaged in a perpetual financial struggle. It is notable that the majority of people have not received any training in personal finance, and ironically, they want to be in control of their finances when they are technically out of their financial wits.

Aluta nova! The new struggle must continue against financial ignorance. Personal finance is like one’s career, it cannot be relegated to someone else, and it must be individually managed. One should be the captain of one’s finances.

After emancipation from any form of servitude, authentic reconstruction and not artificial reconstruction must follow. If leaders pay lip service to authentic reconstruction, there will be societal retrogression which may lead us to servitude of a special type.

For example, when slavery was abolished in the USA, leaders such as Booker T. Washington used the following criteria to measure societal progress: education (particularly industrial education), material as well as moral regeneration.

On the other hand, our reconstruction in South Africa was intended to roll our people uphill, especially the less fortunate, however, it was erroneously implemented.

The new government’s quest to redress the legacy of apartheid was confined to giving away of houses (the so-called ‘’RDP’’ houses), and the introduction of the Child Support Grant. It did not matter whether the mother or the father had been in school or not, morality never played any role during reconstruction.

Washington stood open-mouthed when he observed behavioural financial illiteracy in the year 1900: “In Washington, I saw girls whose mothers were earning their living by laundering. These girls were taught by their mothers, in rather a crude way it is true, the industry of laundering.

“Later these girls entered the public schools and remained there perhaps six or eight years. When the public school course was finished, they wanted more costly dresses, more costly hats, and shoes. In a word, while their wants had not been increased, their ability to supply their wants had not been increased in the same degree.”

The question is: will the generations of the future, repeat the mistakes of the past?

South Africans are currently facing a myriad of challenges - notably electricity (load shedding increasing the cost of doing business, which is then pushed onto the consumer), high unemployment rate, low growth (as measured by GDP), forever rising interest rates (making borrowed money more expensive - higher repayment instalments on home loans, car finance, Mashonisa / loan sharks) and inflation.

These challenges are culminating in government and corporations not honouring their payments for goods and services on time, low salary increases, and causing people (especially the middle class) to use debt just to survive as they cover their monthly expenses for basic needs such as a place to shelter under, food and transport.

Those close to or retiring are cashing in their pensions through the two-pot system, to cover debt created over time. So, the South African economic landscape is very bleak at the moment!

Money is a limited or scarce resource and is earned; it does not fall from trees. Most South Africans have now come to the realisation that water and electricity which we used to take for granted, are now scarce resources (and sold as expensive commodities).

Since we are living in an era of scarcity and not abundance, we need to use money wisely to satisfy our basic needs first, then our wants at a later stage. To be able to pull this feat off, one should be able to draw a line of separation between a need and a want.

Abraham Maslow’s hierarchy of needs helps us to channel our money to the correct direction, firstly to physiological needs (food, shelter), safety (security, transport), love/belonging, self-esteem, and lastly self-actualisation. Hypothetically, if we had to pay for the air that we breathe in order to stay alive, that is where we would first channel our money.

To survive this weak economic climate, one must prioritise one’s money as follows:

Pay yourself first - You have worked very hard to earn a living. We are not referring to pampering, massage, and entertainment. No! It means that you must put money for a rainy day. This will come in handy in case of emergencies (illness, accident), job loss or higher food and debt repayment prices, and finally retirement (when you are no longer working). Automated savings.

Basic needs - (Air, Food, Shelter, Transport, Education, Connectivity (Wi-Fi).

Servicing debt - (hopefully taken to buy needed assets like a house (for a place to shelter under), car (for transportation).

Others - Based on affordability.

This personal financial series will run for the next five weeks.

*Bheki Dlamini is a financial coach and former CFO

*Nyiko Nghatsani is a personal financial consultant.

Author and life coach Mabila Mathebula has a PhD in Construction Management.