JustMoney <\/a>– a financial services group – provided four common Financial mistakes young people make and how to avoid them, which are outlined by professionals through personal experience.<\/p>\n\n\n\n“The road to financial independence is strewn with obstacles, and young people aren\u2019t always savvy enough to know how to deal with them,”<\/p>\n\n\n\n
“JustMoney chatted with four South Africans about money mistakes they made when they were younger and lessons they have learnt about managing their finances,” it said. <\/p>\n\n\n\n
These four mistakes and lessons learned are listed below.<\/p>\n\n\n\n
1. Using credit to overspend<\/strong><\/p>\n\n\n\nOverusing store accounts and credit cards proved a problem for Rachel Smith, a 50-year-old consultant.<\/p>\n\n\n\n
\u201cFinancial literacy was not discussed much when I was young, and this was at the heart of my relationship with money,\u201d she said. Getting into debt meant she had to delay saving and investing.<\/p>\n\n\n\n
Her advice to young people today is to \u201cpay with cash and start investing and saving earlier. Never underestimate the value of compound interest. It can reward you far more than the latest branded sneakers or bag. Every time you feel the urge to buy something new, ask yourself if you really need it.\u201d<\/p>\n\n\n\n
She added it\u2019s essential to engage a trusted financial adviser. \u201cWe\u2019re not all financial experts. It\u2019s good to get insight and perspective from an objective person\u201d.<\/p>\n\n\n\n
2. Neglecting savings<\/strong><\/p>\n\n\n\nFor 40-year-old human capital professional Sanele Zungu, failing to save money has proven costly.<\/p>\n\n\n\n
\u201cI didn\u2019t think I had enough money to put away each month, but to be honest, I could have foregone a lot of bought lunches and saved that money instead,\u201d she said. \u201cIf you have a mental block because you think you need large sums of money to save, remember that savings accumulate.\u201d<\/p>\n\n\n\n
Although she received rental income, she spent it rather than putting the funds into her home loan. \u201cThe intention was to pay more than the instalment to decrease the interest I paid to the bank \u2013 but that didn\u2019t happen,\u201d she added.<\/p>\n\n\n\n
Her inability to live within her means saw her transferring funds into a savings account but making online transfers into her primary account by mid-month.<\/p>\n\n\n\n
\u201cIf I could go back, I would redirect rental income into my home loan and set an entertainment budget to limit my spending,\u201d she said. \u201cI would have my tenants pay directly into my home loan, so I couldn\u2019t access the money without going through the cumbersome process of applying for an access loan.\u201d<\/p>\n\n\n\n
3. Not preparing for retirement <\/strong><\/p>\n\n\n\nLearning performance consultant Pregs Pather (53) said his mistake was \u201cnot starting a formal retirement fund investment as early as I should\u201d.<\/p>\n\n\n\n
He says discretionary investments are insufficient for retirement and recommends that young people start contributing to a retirement annuity (RA) when they start paying taxes.<\/p>\n\n\n\n
\u201cThe delay in taking out an RA has meant I\u2019ve lost out on tax deductions for the years I didn\u2019t contribute,\u201d he added. He is contributing to an RA and pension fund to maximise tax benefits. \u201cHowever, it\u2019s impossible to claim the lost deductions\u201d.<\/p>\n\n\n\n
4. Fear and financial illiteracy<\/strong><\/p>\n\n\n\nDhivya Pillai, a 29-year-old researcher, said her biggest mistake has been a fear of money.<\/p>\n\n\n\n
\u201cBanks and the financial system are extremely intimidating, and I think financial education in South Africa is generally poor,\u201d she said. \u201cDespite my privilege, my financial literacy is shocking.\u201d<\/p>\n\n\n\n
Fortunately, she has time to remedy the situation. \u201cMy mistakes haven\u2019t had much of an impact yet, but they will as I get older,\u201d she added. \u201cI\u2019m working hard to overcome my mental block, so I\u2019m less scared of the system and can use it to my advantage.\u201d<\/p>\n\n\n\n
She recommends young people read as much as they can about finance and fill educational gaps themselves \u2013 but cautions them to be discerning about sources of information. \u201cNot every \u2018finfluencer\u2019 (financial influencer) is an expert,\u201d she warns.<\/p>\n\n\n\n
\n\n\n\nRead: SARS is now going after these types of taxpayers<\/a><\/strong><\/p>\n\n\n\n<\/p>\n","protected":false},"excerpt":{"rendered":"
JustMoney lists four financial mistakes common among young South Africans and provides strategies to avoid them.<\/p>\n","protected":false},"author":10,"featured_media":696539,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[14195,853],"class_list":["post-722868","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-justmoney","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/722868","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=722868"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/722868\/revisions"}],"predecessor-version":[{"id":723604,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/722868\/revisions\/723604"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/696539"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=722868"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=722868"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=722868"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}