Getting youth to manage their money better

According to a survey done by Old Mutual in partnership with South Africa’s TVET colleges, many students are battling to repay their debt, with 14% skipping classes due to financial difficulty. This highlights the dire need for intervention.

Although most students (72%) are confident in their ability to manage their finances, the overwhelming majority (78%) don’t know how to budget properly. This is one of the core findings of a survey conducted by Old Mutual among 727 students between the ages of 18 and 25 at Technical and Vocational Education and Training (TVET) colleges across the country as part of its Financial Wellbeing Programme.

The survey found that 52% of students confirmed that they have a budget, but don’t always stick to it, while a further 25.7% admitted that they don’t have time to budget. Only 22% of respondents managed to both have a budget and stick to it. The survey findings show that there is a marked discrepancy between students’ perceptions and reality.

While most students feel they are in control of their money, the fact that the majority of them don’t budget properly would indicate otherwise. Another key standout from the survey is that 11% of a smaller sample group of 249 students have some kind of debt, with 20% of these students indicating that they are not coping with their debt. Over 14% of those surveyed said they sometimes or often miss classes due to financial difficulty.

This is one of the crucial messages that we emphasise in our training – the importance of driving down bad debt and using good debt wisely. Unfortunately, many young people feel that they don’t have a good handle on their debt and need help understanding how to gain control of it. A further insight from the survey is that only 28% of respondents are saving regularly.

Protecting and investing your wealth is another lifelong habit that we highlight in our training. Again, students need help in this area. Many feel they don’t have enough money to save or invest, but the truth is that the earlier you start on your investment journey, the better, and every little bit counts.

While the baseline data show concerning trends in terms of budgeting, saving, and debt management, the research nevertheless proves that even short interventions can build real financial capability among the youth.

In the pre-assessment survey, students reported being only 41% financially confident, whereas post-training, this figure improved to 57%.Similarly, only 28% of respondents said they were financially informed before the training, while in the post-assessment survey, 48% said they believed the training had improved their financial knowledge. This makes a strong case for the value of financial education in helping young people make informed decisions and build financial resilience.

* Manyike is the head of financial education at Old Mutual.

PERSONAL FINANCE