Financial education impacts more than just money

A recent study conducted by the Organisation for Economic Co-operation and Development (OECD) reveals that South Africa ranks lowest among 30 countries in levels of financial competency. With unsecured debt rapidly reaching unsustainable levels, and the country’s debt-to-income ratio having risen steadily from 72% in 2019 to 77% in 2020^[1], South Africans today are overwhelmed with debt. “Almost half of us don’t manage to save at all within our lifetimes^[2],” says Leana de Beer, CEO of WaFunda, a financial wellness platform aimed at improving students’ financial outcomes through increased confidence, positive behaviour, and better decision-making regarding their finances.

“Financial education initiatives aimed at young South Africans will have knock-on benefits throughout all stages of their lives, and a positive long-term impact on the country’s economic growth.”

WaFunda, the social impact enterprise behind Blackbullion South Africa, believes that student debt is linked directly to mental health, which can be effectively improved through growing financial literacy skills.

“It is therefore crucial for students at all levels to cultivate financial knowledge, as this lays the foundation for better life outcomes, and a brighter financial future,” she says. “We have seen our financial education programs realise significant impact, by fully integrating financial literacy into the bursary disbursement process. This adds immense value for the determined young students pursuing higher education in these challenging times,” says de Beer.

De Beer believes that the prevalence of student debt is symptomatic of the high levels of debt in South African society at-large. “Although we don’t have exact current figures, we know that student debt in SA runs into the R100s of millions, and that the average student in SA is in debt^[3]. Last year the minister of Higher Education and Training, Dr Blade Nzimande, announced that his department would not be able to write off fee-paying students’ debt^[4], much to the disappointment of the many who had petitioned for relief,” de Beer explains.

De Beer notes that students, whose money comes primarily from family support, funding initiatives, and student loans, spend more than the average South African each month^[5]. As with other population groups, their money is largely spent on accommodation, transport, and healthcare, with additional budget needed for study materials, textbooks, stationary and data. However, a significant portion of many students’ budgets also goes towards non-essentials like alcohol, fashion and gaming. Around a quarter of students open retail accounts^[6], and very few students manage to save during their academic careers.

“These are areas where financial literacy could stand young people in good stead. Students who are smart about money make good day-to-day financial decisions, and plan for the future. They proactively cultivate financial discipline, and begin saving while studying if possible, even though it takes sacrifice, and resources may be very limited. Part of financial literacy is a balancing act between the needs of now, and an earnest investment into their own futures,” she suggests.

“The pandemic has wrought economic havoc, and we have yet to comprehend the full extent of its impact on students’ financial lives. Traditional metrics can’t fully capture the scope and magnitude of what today’s students are up against, as this moment has no precedent in history. What is clear is that we must urgently democratise access to financial education. Financial education should - and must - be incorporated as a key aspect of general education at all levels, especially the financially formative tertiary phase.

Financial knowledge can empower our youth, helping them develop essential money skills, lifelong financial confidence, and understand the importance of saving while studying, even if they have very little money to work with at first. “It is a crucial component in enabling SA’s youth to pursue their life’s goals and ambitions, whatever they may be. Financial knowledge plays a huge role in attaining an upwardly mobile career trajectory, lifelong happiness and fulfilment, and being able to support family when needed,” she concludes.

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For more information on Blackbullion South Africa, visit https://www.wafunda.com/products/blackbullion or send an email to [email protected] to book a demonstration of the platform.

Issued by HWB Communications Pty Ltd on behalf of Blackbullion South Africa.