Youth Month 2023: Harnessing financial literacy for a prosperous future

Youth Month is dedicated to recognising and empowering the South African youth.

Under the theme “Accelerating collaborations and opportunities to improve the lives of the youth,” this year's Youth Month aims to foster partnerships and initiatives that enhance the overall well-being of young individuals.

According to Bertie Nel, Momentum Head of Financial Planning and Advice, financial literacy is a crucial aspect that can significantly contribute to improving the lives of the youth, because it is a fundamental life skill that empowers individuals to make informed financial decisions and in so doing paves the way for long-term financial stability and independence.

“Sadly, many young people enter adulthood without adequate knowledge of basic financial principles such as budgeting, saving, and debt management. Consequently, they find it difficult to achieve important financial goals such as purchasing a home or a car, funding higher education or starting their own business. This is where financial advisers fit in,” he says.

For Nel, financial advisers play a critical role in guiding and educating young people about managing their finances regardless of their current financial circumstances. Financial advisers are experts who specialise in providing personalised financial advice. They have extensive knowledge on aspects like budgeting, saving (also for retirement), insurance, debt management, and investing.

Nel highlights five ways financial advisers can help young individuals to navigate the financial landscape:

• Building a solid financial foundation: Financial advisers can assist young people to build a strong financial foundation by helping them to draw up and keep to a budget, track expenses and prioritise savings. These essential skills enable the youth to take control of their finances and make wise financial decisions from an early age.
• Setting and achieving financial goals: A financial adviser can help young individuals with setting short-term and long-term financial goals, such as saving for higher education, buying a car, or starting a business. With a customised financial plan that considers their resources and unique circumstances, financial advisers can help their young clients to achieve their aspirations.
• Understanding investments and wealth creation: Investing is not only for the rich! Investing wisely by leveraging the power of the eighth wonder of the world -compound interest, is crucial if young individuals want to secure a prosperous future and, later on, also create wealth. Financial advisers can advise them on different investment options and risk management.. By instilling sound financial principles, financial advisers empower young individuals to make more informed decisions about their finances and how to leverage their financial resources for long-term growth.
• Debt management and credit building: Many young people face debt and credit management challenges. Financial advisers can provide guidance on managing debt effectively, responsible borrowing habits and improving their individual credit scores.
• Navigating life transitions: Life is full of significant transitions, such as starting a career, getting married, starting a family, changing careers, retrenchment, retirement, later maybe critical illness or even death; all of these have financial consequences. With their tailored financial advice and strategies, financial advisers can help the youth to successfully navigate these transitions. When they share their insights on aspects such as optimising income, insurance needs, and planning for retirement with their young clients, they can help these young individuals to make sound financial decisions during critical life stages.

Nel says consulting with a financial adviser can equip the youth with knowledge, skills, and resources to secure financial well-being and achieve their dreams - regardless of their current financial circumstances. By making sound financial decisions now, the youth can accelerate their journey to success.