4 ways youth can improve financial management amid Covid-19
A recent survey revealed that only 56% of employed South Africans start to save at the age of 28 as opposed to the recommended 23. This insight mixed with several socio-economic pressures, reinforces the fact that there some areas where young people can improve their relationship with money in this country.
Some of the top spending trends among the youth include entertainment, travel, clothing, education, data and cellphone services. In a country where the pressure on consumers is always increasing, the environment can be very tough for young people. It is therefore essential that our youth use these uncertain times to polish up on their finances.
Here are four tips that can help young people become more financially savvy during these times, while also identifying some ways to generate revenue streams in what is a rapidly changing world.
Beware of “revenge spending”
With the country now at “advanced” level 3 lockdown, there are more opportunities for people who can afford to, to go out and spend. Whether it is eating out, retail therapy or grooming, there is no shortage of leisure activities for youth. However, the phenomenon known as “revenge spending” can be detrimental to finances which could be used for other essentials.
Lockdown forced South Africans to purchase only the items that are necessary to get by. We’re not saying those who have a little extra should not treat themselves, just always be cognisant of what you choose to spend money on by asking yourself the age old question; “do I really need this right now?
Avoid “get rich quick” schemes
Online fraud has peaked during lockdown. An example is the recent WhatsApp “Ponzi” scheme where a prominent person’s identity is used fraudulently by criminals, posing as well-known financial institutions, to extract money from individuals.
With the increasing pressure on young people to succeed financially, the ‘opportunities’ presented through such schemes can be very tempting. However, we caution against this as a bank and would rather see our youth pursue legitimate ways of earning income. The rule is and always will be; if it is too good to be true, it probably is.
Tap into digital solutions
One of the key responses to the Covid-19 pandemic has been the emergence of new digital solutions to address the needs of consumers, especially young people who we all know are early adopters of technology. There are now various methods available for the exchange of money without physical contact, thus helping keep people safe.
Capabilities such as SnapScan and Tap to Pay with cards now help mitigate the risk of physical interaction during this time. In the event where money needs to be sent across the country, features like Instant Money now make it possible from the comfort of your own home.
Beware the pressure of social media
With over 7.7 million South Africans active on Twitter alone, social media has played a significant part in people’s lives during lockdown and has also been proven to be the source of much anxiety and depression among young people in this country.
As a young person, it can be very tempting to make poor financial decisions in order to appear successful online. It is important to always be honest with yourself about your finances, and rather take time to develop a clear financial plan to get you where you want to be in life.
We would like to encourage young people to remain as calm and unemotional as possible when handling their finances currently. With our emotions running high, it may be tempting to make an irrational money decision. Now is not the time for big decisions, but for reducing unnecessary spending, allocating more to saving and additional income streams while waiting for the storm to pass.
Lindy-Lou Alexander is the Marketing Head of Personal and Business Banking at Standard Bank