Page 17 - DUT CONNECT - Spring 2024

FOR Alumni and Friends OF THE DURBAN UNIVERSITY OF TECHNOLOGY 5 REASONS FINANCIAL LITERACY IS IMPORTANT
Financial literacy is crucial to South Africa as it enables individuals to make informed decisions about their money, save for the future, and avoid debt. Here are some key reasons why financial literacy is important in South Africa:
1. Reduces poverty and inequality. 2. Improves savings and investments. 3. Enhances economic growth. 4. Empowers individuals.
5. Addresses financial exclusion.
WHAT DO I NEED TO KNOW?
Financial literacy is a unique journey for each person, but what it boils down to is understanding how much you earn, spend, want, and can grow.
To understand this, the advice is to:
1. Start with a budget. It’s as simple as monitoring the money you earn every month, and the amount you spend. Remember that all the small purchases add up, so do all the automated payments for apps and streaming services. The purpose of the budget is to adjust things, so you don’t spend more than you earn!
2. Decide on a savings goal so that you have a tangible target in mind.
3. Allow the power of compound interest to grow your money because as Albert Einstein said “Compound interest is the eighth wonder of the world. He who understands it earns it, he who doesn’t, pays it.” Compound interest is the interest you earn for letting interest accumulate. In other words the longer you leave the money in your savings vehicle the more it will grow.
SOME PRACTICAL TIPS:
1. Make money real: You work hard to earn your money. Before you spend your hard-earned income on something,
ask yourself how many hours of work it costs.
2. Small changes make a difference: Make money a daily habit even if it is 10 minutes a day to keep a money journal or check your expense tracker. Remember it only takes 21 days to develop a habit, according to Maxwell Maltz
3. Credit health: Knowledge is power. Learn about inflation, the cost of lending, how interest rates work.
4. Get out of the debt trap: Access your credit report, understand how many creditors you owe and how much of your
income is spent on debt.
5. Financial goal setting: Make room in your budget to save. Just like spending, saving is a choice.
6. Investing vs saving: Learn about investing and how to make your money grow. There are many vehicles to help achieve your goal.
7. Protect yourself and your loved ones: Make sure you have an up-to-date Will, as this is one of the most important documents in your financial life. Do an insurance audit at least once a year to ensure you have the right insurance cover in place for your stage of life.
Old Mutual has many free online tools that concentrate on financial literacy, including the ON THE MONEY programme and a podcast, to help people manage money well and achieve financial stability.
There are also various initiatives to promote financial literacy, such as the financial literacy programme, Money Smart Week, by the National Treasury, and the Financial Sector Conduct Authority (FSCA).
Look forward to Part 2 Investing in the next edition of DUTConnect.
MONEY SMART WEEK SOUTH AFRICA 2024 Protect your money. Secure your future 26 August 2024 - 1 September 2024
Yegan Reddy
Business Development Manager KZN | PFA Responsible for Public, SOE and Private Enterprises T. +27 (0)31 581 0673 C. +27 (0)826584745
E. yreddy@oldmutual.com | oldmutual.com
Old Mutual Life Assurance Company (SA) Limited is a licensed FSP and Life Insurer.
OMBDS 8.2024 C11407 (38002)