Are South African millennials going to land up broke?

by CNBC Africa 0

Pieter Rossouw | Momentum

Financial Wellness for the Afrilennial – the South African millennial – is a challenging prospect. It could be said that Afrilennials, who are the largest, fastest-growing sector of our population, must contend with two disadvantages when it comes to financial wellness. The first is the low level of financial literacy that is endemic to South African society, and the second is the vast array of financially sophisticated products available to them – many of which aren’t designed to best meet the consumer at a level that’s simple and suited to their needs. Adding to these challenges, even the concept of money is a lot more abstract for millennials. Their wallets don’t contain money, only plastic. The physical value of money quickly dissolves in a world that’s becoming increasingly virtual. As members of the swipe-and-click generation, they often don’t realise how much they are spending and whether or not there is true value in their purchase. If a pair of shoes costs R2000, they tend not to consider the amount that they are spending relative to the effort and time involved in earning that amount.

 

There are traits that all millennials have to some degree, no matter which continent they hail from. This is a generation of digital natives, often defined as having been born between 1982 and 2004, and known for being entrepreneurial, focused and ambitious. These are all laudable traits, but without an understanding of what it takes to be financially well, their futures will be uncertain.

In a set-up where there is often little money to save, it’s difficult to have conversations about the importance and value of saving and Financial Wellness in general. For many Afrilennials, where their money is spent every month is a tough decision. Black tax sees an income earner expected to support both immediate and distant relatives. Members of the sandwich generation must support their own families as well as their parents, leaving many with no disposable income.

One needs disposable income in order to save. When this is at a premium it becomes crucial for this generation to know the basics of Financial Wellness.

To be able to eke out some savings, Afrilennials need to learn to make some tough financial choices. Differentiating between wants and needs should be at the forefront of their minds. That DSTV premium subscription can be downgraded and the daily cappuccino is not essential. Add to that some further budget cuts, and there should soon be a few hundred rand with which to ease the financial distress.

Let’s face it, saving is not sexy yet, it can be the foundation of one’s quality of life. Financial service organisations have an important role to play in this regard. Afrilennials don’t have much faith in impersonal, aloof financial service providers. The “me” generation want real, genuine, personal treatment and if we as an industry want to help secure their financial wellness, we need to make our offerings more “sexy”.  We need to communicate with our new clients in a way that allows them to build a healthy relationship with us, and especially with their money.

Once we have that relationship, Financial Wellness for Afrilennials is possible – starting with the basics: a budget, good advice, a solid financial plan and discipline.

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