Finance MEC’s tips on youth savings

MEC Ravi Pillay urges people to save money to avoid the debt trap

Finance MEC in KwaZulu-Natal, Mr Ravi Pillay has called on people to start saving money to avoid the credit trap. If this call can be heeded the lives of people can be changed for the better.

Pillay is persuading the people of the province to stick to budgeting before spending so that they can spend in an organized way. The MEC said: “The proverbial expression loosely translated, ‘the bull is among the calves’. It is for the same reason the campaign for money saving will focus more on youth so that they can start preparing for a brighter future.”

The MEC said: “We are encouraging the youth to start at an early stage to adopt budgeting as a way of life if they plan to spend money. They must learn to understand the difference between what they need and what they want. This results to responsible way of handling money and limit its use only for what is necessary. Whatever is left over as change must be deposited into the bank or be channelled to stokfel accounts for emergencies like health care, renovations, funerals etc”.

He further said it concerns him to him to see young people drowning in debt they could have avoided had they been taught budgeting skills early in their lives.

Mr Pillay said many people who succeed in handling their finances well are those that stick to budgeting before spending their money. “They know their needs and they plan in advance using the money they have in hand.”

As far as he is concerned budgeting should be part of family discussions so as to know each family member’s needs and those of the family. Important needs like bond payments, vehicle instalments, insurance, burial clubs, rates and groceries should never be disturbed if compared to entertainment, changing furniture and decorating a home.

“It becomes a lot easy if family members agree on what they will spend having first looked at their income as family. They are able to plan according to what is priority or an emergency that cannot be put off,” said Pillay.  

He also advised people to save by using cash instead of credit. “If you buy something on cash you save more than if you buy it on credit and pay for it in instalments – The latter makes you to pay for the same item three times more than if you buy in cash,” emphasized Pillay.

He cautioned people not to spend money they don’t have, but rather be wise by spending on what they need, taking full advantage of cash discounts.

According to the latest statistics by the South African Savings Institute (SASI), 20 million people in South Africa between the ages of 15 and 35 buy on credit. SASI attributes this to the fact that most youth are from previously disadvantaged black communities who were denied economic opportunities in the past, lack of job opportunities, tax pressures and the unstable economy.

The SASI Acting Head, Gerald Mwandiambira is encouraging financial education. He believes saving is not dependent on income but rather more on whether one is prepared to learn about saving. Saving also need perseverance. Mwandiambira says people must talk to financial advisors so as to be equipped with better ways to save money.

“It is important that people should not only focus on the negatives about savings but look at the benefits and start better ways of savings,” concludes Mwandiambira.