A young professional's guide to building wealth

South Africans are facing a time of unprecedented financial complexity, which is why it’s more crucial than ever to develop strong financial habits from an early stage, according to wealth manager Citadel.

According to the Citadel, compelling evidence, both locally and globally, suggests that Millennials (Gen Y) face far greater financial challenges than previous generations. Research from the Journal of Consumer Research indicates that Gen Y struggles significantly more to finance homes and other large expenses compared to Baby Boomers in the 1970s.

Meanwhile, Ipsos research highlights that historical inequalities have left many South African Millennials without inherited wealth, making financial security harder to achieve.

Citadel Advisory Partners Kirsten Smit and Elelwani Ravele provide a financial roadmap to help working professionals navigate today’s economy.

 “Your first salary sets the tone for your future financial habits,” says Ravele. “From the outset, working professionals can calculate their fixed costs for items like groceries, entertainment, and transport to avoid the trap of lifestyle inflation.”

Smit agrees, emphasising the importance of financial balance. “The goal is to enjoy your life but still create a deliberate surplus that can go into discretionary and retirement savings.”

For young professionals, avoiding emotional or impulsive financial decisions is vital, especially when it comes to high-cost purchases. “A car is not an investment; it is a lifestyle choice. Vacations are great, but it is important not to pay for them using debt or emergency savings,” warns Ravele.

Savings play a transformative role in building wealth, according to Smit. “An emergency fund totalling three months’ salary is one of the smartest moves you can make. It gives you financial resilience, whether it’s for unexpected unemployment, medical emergencies, a burst geyser, or helping a family member.”

Financial planning is especially critical during major life moments, and professionals are encouraged to have transparent discussions with their partners and advisors before making big financial commitments.

“Big life moments require big financial planning,” says Ravele. “Whether it’s buying a first car, having a baby, or financially supporting parents or siblings, you need a clear plan. Stress-test your budget beforehand to ensure it is truly affordable.”

On the topic of property investment, Ravele cautions that buying property isn’t always the best move. “Homeownership comes with levies, maintenance, rates, and taxes that buyers need to carefully consider. Renting, on the other hand, provides flexibility, especially if you’re uncertain about relocation or future travel.”

In discussing marriage, Smit explains the importance of financial transparency between partners. “Money values are shaped by upbringing. When two people come together, they bring different habits and expectations. Talk openly about spending styles, income, debt, saving goals, and prenuptial agreements. It’s not unromantic—it’s thoughtful. Financial transparency is the cornerstone of a healthy partnership.”

For parents, future financial planning is essential, advises Smit, a mother of four. “When it comes to children, factor in everything from school fees and sports tours to international investments, if you wish to raise global citizens.”

“Ensure long-term savings for your children, including unit trusts and tax-free savings accounts for their education. Investing in life and disability insurance is also vital for parents to safeguard their family’s future,” adds Smit.

While digital financial tools have made DIY solutions more accessible, Smit emphasises the value of professional advice. “We’re in a generation that loves DIY apps, but talking to a financial advisor is different. Advisors bring experience, empathy, and tailored insights to help professionals map out financial goals and avoid costly mistakes.”

Starting early, even with small amounts, can unlock the power of compounding and maximise long-term financial growth, notes Smit.

Considering that young professionals today face higher costs than previous generations, personal finance is no longer a skill that South Africans can afford to learn later in life.

Ravele says: “It’s common for people to think, ‘I’m young and healthy, I don’t need to plan.’ But your income is finite, and getting into the habit of saving—even small amounts—can drastically improve your wealth trajectory.”

PERSONAL FINANCE