Financial literacy: What does it mean and why does it matter?
Every day, you make decisions about money. Sometimes you make small decisions, like whether to buy the small slab of Top Deck or the big one; or you make big decisions, like whether to take a loan to pay for a new Polo.
And here’s the thing: every decision you make, big and small, has a lasting impact on your financial future. That’s why it’s so important to be financially literate — to know how money works and how to use the right tools to manage it.
Financial literacy gives you the confidence to make smart decisions. Hopefully, those decisions will allow you and your family to thrive and they’ll allow you to live happily ever after when you decide to retire.
If you crunch the numbers, it’s not looking so hot for the average South African…
But all is not lost! Here are three ways to improve your financial literacy and make a difference:
1. Educate yourself
By reading this Slice you’ve already taken the proactive step to learn how to manage your money. Find an archive of all our newsletters here and follow us on Instagram for bite-sized tips. Also explore other resources: Capitec, for example, has a series of free online courses in financial literacy.
2. Set goals
Before you can start saving, you need to know what you’re saving for. Do you want to be able to pay for your kids’ university education one day? Do you want to buy a house? Once you know what you want in life, you can work out how much you need to save. Then you can use the free 22seven app to create a budget, track your spending and make sure you reach your goals.
3. Be an example in your community
One of the best things about being financially literate is that it’s contagious! It’s so easy to share your knowledge and empower others around you. Imagine being able to help a friend or family member avoid making a bad debt decision, simply by helping them understand how much they’ll end up paying in the long run.
At the end of the day, better financial literacy leads to a higher quality of life. It’s no secret that financial stress and mental health are linked. By educating yourself and being disciplined with your spending, you’ll improve your mental wellbeing and your prospects, and you’ll contribute to the economic empowerment of the whole country. That sounds like a win-win to us!