By Nicolette Mashile
One of my favourite sayings is “Financial literacy, just like weight loss, isn’t dependent on one thing. It’s 20% education and 80% your action.”
A year into the Covid-19 pandemic, I’m reminded of a young woman I interacted with a few months before South Africa’s initial hard lockdown. She was thinking of taking out retrenchment cover. Two months into lockdown, when we were all cooped up in our nests and small businesses were taking the biggest economic losses, she was retrenched.
She called me in a panic about her options. I casually said to her: “I know it’s a difficult time, but you are better off than your colleagues, who probably don’t have retrenchment cover.”
I could hear her breathing simmer down as she whispered: “I didn’t get round to taking up that cover.”
My proud shoulders shrank. She was equipped with the knowledge, but she didn’t press the go button.
Surely you have heard people ask: “What’s the point of knowing all these financial terms if I’m never going to use them?” You’ve probably thought that if you are not going to be a financial adviser or chartered accountant, what is the point of knowing the difference between debit and credit?
On the other hand, you’ve surely heard that knowledge is power and education is the key to success. Therefore, you will never be disadvantaged for knowing more than enough, particularly about financial matters.
Financial knowledge is knowledge about how to manage your finances, how you can save and properly spend your monthly income. Knowing how to budget, prioritise expenditures and manage your personal consumption behaviour all form part of this financial knowledge that is so important for South Africans to have. A simple concept such as “Don’t borrow more than you can afford to pay back” is something with which many South Africans struggle to come to terms.
Then ask yourself: Is knowledge really power when it’s not doing anything for you? No, it’s not. That’s like saying you know you should get eight hours of sleep so that you can perform at your best, but you still barely sleep enough hours to think straight during the day.
The same goes for finances. You know how to budget, yet you still consume recklessly, wondering why you cannot save a cent for your future.
Knowledge is powerful only once it is applied, and you see the fruit of the labour you put into implementing what you know.
Financial education is not meant to bore you, and it is not reserved for financial advisers or accountants. It’s meant to empower everyday people to make life-saving decisions and use the financial tools that the industry and its innovative professionals turn out every day.
Start applying the knowledge you have. And if you are not clued up on key financial terms or how to apply them, today is the perfect day to start your research. For example, if you find yourself with “more month than money”, perhaps there’s a problem. You may be living beyond your means.
You can only confirm this by buckling down and drawing up a budget. This will not only help you to put together a spending plan, but you will also know immediately if you will run out of money, and you can make plans to cut down your spending in certain areas so you make it to the next pay cheque still smiling. Knowing the importance of budgeting is one part of the game, but actually doing the budget now, that’s bawwws moves.
The saying “acquired knowledge only becomes powerful when it is applied” points to the fact that financial knowledge is useful to you only when it’s put into action.
It’s important to remember that our minds aren’t like computers, designed to store arbitrary amounts of information. For most of us, we retain what we can use immediately or what we put into action.
I urge you to be a boss today. Find that extra R100 and pay it into your smallest debt, or perhaps download a budgeting app and start tracking your expenses. Download, register, action!
Nicolette Mashile is the co-host of the SABC1 talk show Daily Thetha, an actress on Generations and the founder of Financial Bunny, a financial literacy platform. She has recently written a book, What’s Your Move? A collection of ordinary financial lessons.
PERSONAL FINANCE