Money tips for young people

Money tips for young people

Here is expert advice on budgeting, paying off debt, tax and allocating shared expenses.

Give son money

June is the month when we traditionally focus on the youth of South Africa. However, with youth unemployment at close to 75%, it can seem to young job seekers that there is little to celebrate.

Personal finance website recently spoke to some young South Africans, and found that, despite the multiple challenges they face, they are focused on paying their bills and making every effort to put some money aside.

JustMoney Marketing Manager Shafeeka Anthony says: “Despite the many barriers that the younger generation faces, they are doing their best to deal with financial obstacles and to manage their money optimally.”

What is the biggest financial stumbling block for South African youth?

Materialism is one of the biggest challenges that young people face, according to 25-year-old Mishi-Aal de Kock. He says youth are obsessed with expensive clothing and smartphone brands, and will become indebted in order to enjoy these.

Lack of financial education, and social media influences, were identified as issues by Waseem Ismail, aged 29. Ismail says the financial advice that youth obtain from social media does not come from qualified experts, and this can cause confusion.

Rick Harrison, 31years old, says that choice overload is a critical problem. South African youth have a plethora of options available, and don’t know what to choose.

When it comes to your finances, what do you wish you had learned sooner?

Louwna van Wyk, aged 26, says she wishes she had started saving and budgeting earlier, and learnt about the different youth savings accounts that would help her maximise interest and save on fees.

Had he known how to achieve it, Rueben Vester, aged 22, would have been disciplined enough to stick to his goals and avoid all kinds of debt.

READ: Which is more awkward: Asking for money from your spouse or someone else? 

What factors influence your financial decisions?

“I’m very cheap. I’ll go to a store where I’ll look for the two-for-one deals,” says de Kock. “I spend my money wisely. Before, I would spend it recklessly.

Sharmaine Chihuri, aged 32, says she too is a cautious buyer. She tends to weigh up her options before she makes a purchase.

Ramokebe Thamange, aged 24, notes, “You can make impulsive decisions and it does affect your finances, especially for young people. We spend our money on what we enjoy and don’t think about the consequences of our actions. We’re living in the now,” he says.

Key takeaway tips

Says Anthony, “Whether you’re a young student holding down a part-time job, or on the first rung of the corporate ladder, making your money go further as a young person can take all your ingenuity in these demanding times.

“ offers an array of articles, guides, budget calculators and products, developed over ten years to help people make informed personal finance decisions.”

Anthony lists four topics that resonate with young people – how to divide joint expenses, learning how to budget, tackling debt, and getting to grips with tax.

1 - Dividing household and entertainment expenses

If you’re a student, or struggling to make ends meet, it’s highly likely that you’ll be living with family or friends. Apart from learning how to adapt to their personality quirks, you’ll also have the challenge of managing joint household finances.

Read more here on how to divide money between flat mates so that no-one feels disgruntled. You can also find out more about apps such as Splitwise, to ensure you split bills, not friendships, here.

2 - Drawing up a budget

Do your best to draw up a budget and stick to it. With excellent online advice, the excuse of being clueless about how to manage your money is no longer valid.

Find an easy-to-follow online budget calculator here, or choose a method as simple as having an envelope for each category such as rent and entertainment, and allocating money to each. Read more about alternatives to a traditional budget here.

READ: Money Talk: Expert advice on how to make it through January without taking on debt

3 - Paying off debt

It’s very easy to fall into a debt trap via a mix of credit cards, overdrafts, outstanding bills and fines. It’s essential that you address this overload as soon as possible. Read an article that explains the difference between good debt (investing strategically in your future) and bad debt (funding a lifestyle you can’t afford) here.

4 – Tackling tax

If you’re taking on freelance or contract jobs, your employers may deduct a flat 25% and pay this to SARS. Other clients  may prefer to not get involved and will pay you the full amount.

The bottom line is that, whether money is deducted at source or not, you are liable to pay tax on the total you have earned during a financial year. It’s important to ensure you store the documents proving your expenses in the course of your work, as you should be able to deduct most of them. Find out if you need the services of a tax practitioner, and what the costs are, here.

“How and when you choose to start developing good financial habits is up to you, but there will come a time when you’ll need to boost your money management skills to help you achieve financial freedom,” says Anthony. “It’s highly recommended that you start as soon as possible.”

Image courtesy of iStock/ @JackF

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