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.
The internet loves making lists of things, from top 10 beaches you have to see, to the top 10 restaurants in your area. So, it’s no surprise that there’s a list of the top 10 reasons why people fall into debt. Some are fairly obvious, some are a little more excusable and one is absolutely ridiculous.
Bankrate.com’s list of the top 10 leading reasons for debt starts off with reduced income/savings. That stands to reason. Next up is divorce, followed by an important one, namely poor money management. The list goes on through unemployment, gambling, medical expenses, saving too little, no money-communication skills, banking on a windfall and finally, yes – FINALLY – financial literacy.
It’s no wonder that as South Africans, 70% of income earning adults are in over indebted when ‘financial literacy’ comes in at number 10. It begs the question, if financial literacy was at the top of the list, would there be a list at all? There are glaring inadequacies in the education system, from primary school right the way through to tertiary education that does not include any sort of formal financial literacy.
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.
There is no use in trying to solve our financial problems if we don’t understand finances in the first place. Our lack of financial literacy in this country breeds a society that is constantly playing catch up with their finances and, worse still, putting out fires constantly.
Until we see a shift in paradigm that sees financial literacy (or lack thereof) as the number one cause for debt and financial instability, we’ll spend our lives reading about the top 10 beaches to visit, as opposed to going to see them for ourselves as a result of our financial instability.