How to start your saving, investment journey in tough economic climate

GLOBAL Money Week, observed from March 18 to 24 annually, serves as a pivotal initiative to raise awareness on the critical need for financial literacy among young people.

The campaign underscores the importance of instilling financial awareness from an early age and fostering the gradual acquisition of knowledge, skills, attitudes and behaviours essential for making informed financial decisions.

Ultimately, the goal is to empower individuals to achieve financial well-being and resilience.

In South Africa, the youth confront a myriad of challenges, with high unemployment rates being a prominent concern.

Last month, Statistician-General Risenga Maluleke revealed a 0,9 percentage point increase in the youth unemployment rate, soaring from 43,4 percent in Q3: 2023 to 44,3 percent in Q4: 2023.

For those fortunate enough to secure employment, grappling with record levels of inflation has become a harsh reality.

Despite these challenges, a study conducted by Nedbank in July uncovered a positive trend among young South Africans regarding savings habits.

The study revealed that 68 percent of young adults save monthly, with an additional 7 percent saving weekly. Furthermore, the research highlighted that 89 percent of respondents utilise various informal savings methods.

These range from accumulating grocery vouchers or stamps for end-of-year expenses to participating in stokvels or storing cash at home, demonstrating a proactive approach to financial management.

Despite these encouraging trends, the study also unveiled a strong desire among participants for comprehensive knowledge on ways to grow their money.

A staggering 78 percent expressed the need for enhanced financial education.

This year’s Global Money Week theme “Protect your money, secure your future” emphasises the importance of adopting a responsible and informed approach to personal finances.

It underscores safe money management practices and raises awareness about potential risks in the financial sector such as scams, fraud and data privacy concerns.

Nozipho Van Heerden, the creator of the YouTube channel “Talking Money With Nozi”, offers valuable insights for those embarking on their savings and investment journey.

Van Heerden emphasises the significance of starting by examining one’s budget to identify areas for potential savings. This includes scrutinising expenses to eliminate wastage and increase disposable income.

She advises individuals to negotiate with employers for salary hikes, provided they can demonstrate value through their contributions to the company.

Alternatively, upskilling through courses or pursuing side hustles are viable strategies for augmenting income.

Regarding savings targets, Van Heerden recommends starting with a minimum of 10 percent of one’s income, gradually increasing this percentage as financial circumstances permit. She stresses the importance of consistency in saving to cultivate a savings habit effectively.

In terms of investments, Van Heerden highlights the basics of enrolling in pension or provident funds through employment as foundational steps. She advises against withdrawing from these funds when changing jobs and encourages individuals to consider tax-free savings accounts for long-term investment growth. People can also look at exchangetraded funds or unit trusts; that is another way of investing, Van Heerden said. If you can afford to invest beyond a tax-free savings account, then you can have discretionary investments where you can buy unit trusts, exchangetraded funds and shares. — News24.com