Stian de Witt, CFP®, Executive Head of Financial Planning at NMG Benefits
Do you know how to get the most value out of your banking? Are you savvy in the way that you save? Do you know how to reduce debt and increase your credit score? Do you understand basic investment principles? Do you know how to use your money to get the greatest tax benefits possible?
If your answer to any of the above is ‘no’, you could be among the numerous South Africans in need of financial literacy education. The effects of poor financial literacy can be devastating on your financial future, right through to retirement, where it is estimated that only 6 out of every 100 individuals will be able to retire comfortably.
According to debt counsellor DebtBusters, South Africans spend nearly two-thirds (63%) of their take-home pay simply paying off debt every month. That doesn’t leave much to pay for food, groceries, and transport – let alone save for retirement or deal with life’s unexpected little emergencies. As a result of this South Africans current financial literacy rate sits at 42% of the adult population, according to a 2021 survey conducted by the Organisation for Economic Co-operation and Development (OECD).
“Financial literacy affects every aspect of our lives, from education to where we live and how we access medical care. The less debt we have, the less stressed and heathier we are. Even just taking a few minutes every day to educate ourselves better about financial matters is an investment in our futures,” said says Stian de Witt CFP®, Executive Head of Financial Planning at NMG Benefits.
Stian offers four ways you can improve your financial literacy:
1. App based solutions
One solution to the problem of low financial literacy lies in app-based financial learning experiences, says De Witt. These apps give their users the knowledge to understand financial matters through easy to grasp, story-driven educational content that is delivered to their mobile phones, wherever they are.
NMG’s own offering to employers is SmartAlec, which is powered by global financial education fintech FinEazy. The app teaches users a range of financial principles, from the basics like banking, types of bank accounts, payments and savings through to sophisticated investment portfolios. It also provides guidance on short and long term insurance.
“If you don’t have access to an app through your employer, fear not. There are numerous free online resources that will help you start making better financial decisions. Good financial literacy is the foundation for a better life for you and your family,” said De Witt.
2. Assess your financial situation
Take a thorough look at your income, expenses, debts and overall financial health. It is important to have a clear understanding of the extent of the problem, and exactly which factors are contributing to your financial stress.
3. Manage debt effectively
To overcome debt, address your outstanding balances strategically. This could involve negotiating with creditors to reduce interest rates, explore options for consolidation or refinancing, and establishing a repayment plan that aligns with your financial capabilities. You could either focus on high-interest debts first, or use the snowball method to gain momentum by paying off your smaller debts first.
4. Get professional support and guidance
Speaking to a financial advisor can give you expert guidance tailored to your specific situation. Financial advisors have the resources, experience and tools to support you in your journey towards financial freedom.
ENDS
