CLASS AND RACE CAN IM­PAIR FI­NAN­CIAL LIT­ER­ACY

CityPress - - Business - LESETJA MALOPE lesetja.malope@city­press.co.za

Are­port com­mis­sioned by the Fi­nan­cial Ser­vices Board (FSB) has re­vealed that black and coloured peo­ple are lag­ging behind in fi­nan­cial lit­er­acy and pay lit­tle re­gard to per­sonal fi­nance and house­hold budget con­trols. White, In­dian and Asian peo­ple are the most fi­nan­cially lit­er­ate, ac­cord­ing to the re­port.

It also showed eco­nomic sta­tus as the ul­ti­mate in­flu­encer of fi­nan­cial lit­er­acy, while young peo­ple know their way around fi­nances bet­ter than older folks.

The Fi­nan­cial Lit­er­acy Re­port, con­ducted by the Hu­man Sciences Re­search Coun­cil and pre­sented by Ben­jamin Roberts dur­ing the Sowe­tan Di­a­logues event, is part of the FSB’s SA So­cial At­ti­tudes Sur­vey, which mea­sures South Africans’ at­ti­tude to­wards their fi­nances.

With al­most 3 000 peo­ple sur­veyed, the re­port also in­di­cated that, since 2011, more cit­i­zens are con­trol­ling their fi­nances, but fewer and fewer are plan­ning ahead.

More South Africans are tak­ing loans from both for­mal and in­for­mal credit providers – even on pay­days – as a cop­ing strat­egy, while fewer peo­ple are saving, ex­cept through in­for­mal sav­ings clubs such as stokvels, the trends for the past six years show.

More than half of the peo­ple who know about sav­ings ac­counts have them, but only 2% of South Africans have home loans from banks, unit trusts, stock ex­change shares and loan pro­tec­tion in­sur­ance, while only 11% of the pop­u­la­tion polled has a pen­sion fund.

“The re­search shows that white, In­dian and Asian adults have sig­nif­i­cantly higher lev­els of fi­nan­cial lit­er­acy than black African and coloured adults. This is largely at­trib­ut­able to the in­ter­sec­tion be­tween race and class in South Africa, with white and In­dian adults gen­er­ally tend­ing to be wealth­ier and bet­ter ed­u­cated,” Roberts said.

He added that the pat­tern ap­plied to the four do­mains of the sur­vey, which are fi­nan­cial con­trol, fi­nan­cial plan­ning, ap­pro­pri­ate prod­uct choice and fi­nan­cial knowl­edge; all four cover a to­tal of 33 in­di­ca­tors.

The re­port also in­di­cated that the poor lev­els of fi­nan­cial lit­er­acy have re­sulted in poor choices of fi­nan­cial prod­ucts. Across all in­di­ca­tors, it shows a clear class and hu­man-cap­i­tal bias. No gen­der bias was ev­i­dent, there­fore show­ing that men and women adapt equally; how­ever, over­all, younger South Africans seem to be more fi­nan­cially lit­er­ate than older gen­er­a­tions.

Roberts pre­sented the re­port shortly be­fore a panel dis­cus­sion that in­cluded rep­re­sen­ta­tives of the Na­tional Credit Reg­u­la­tor and Na­tional Trea­sury.

Roberts said the study was im­por­tant for pol­i­cy­mak­ing and though salient so­ciode­mo­graphic dif­fer­ences were iden­ti­fied, the most ro­bust pre­dic­tor of fi­nan­cial lit­er­acy was still eco­nomic sta­tus.

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