Road to Financial Freedom

By Ashley Malepe

Financial freedom in a land whereby almost half of the people above the age of 18 fall below the upper-bound poverty line, may sound impervious and unattainable for most people. Poverty in South Africa cannot go unnoticed and continues to be a wide prevalent issue in the country. STATS SA’s Poverty Trends in South Africa report, released in August 2017, shows that a quarter of the population lived in extreme poverty in 2015. More than half the population (56%) was considered to be living in poverty as defined by the upper-bound poverty line. According to the report, the people most vulnerable to poverty in South Africa include women, black people, minors, youngsters/students, and residents of the Eastern Cape and Limpopo. This is due to the inherited riddled history of South Africa that the country still continues to grapple with financial oppression, inequality, and financial illiteracy.

But just what is financial literacy and why is it important especially for youth?

To understand financial literacy means that you are very well on your way to financial freedom. First things first, what does it mean to be financially free? Joanelle Smit, financial planner, and director at Spectra Plan BlueStar defines financial freedom as a state in a person’s life in which you have enough savings, investments, and cash to afford a lifestyle that you may wish for yourself and for your families. This does not mean being rich or having huge amounts of money saved up for ‘rainy days’ but knowing how to manage your financial woes and having enough when needed. This now leads to financial literacy, which is better defined by Jason Fernando who is director at Voyager Holdings, Jason defines it as the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. Financial literacy is the foundation of your relationship with money, and it is a life-long journey of learning. The earlier you start, the better off you will be, because education is the key to success when it comes to money.

Being financially illiterate can lead to several pitfalls, such as being more likely to accumulate unsustainable debt burdens, either through poor spending decisions or a lack of long-term preparation. This in turn can lead to poor credit, bankruptcy, and other negative consequences. Thankfully, there are now more resources than ever for those wishing to educate themselves about the world of finance. One such example is getting a bank that charges you less and offers more than just banking but a range of free learning resources or articles to help you be savvy with your ‘Randelas’. However, to be savvy with your

‘randelas’ it may mean that there should be some source of income. This now becomes a challenge for most youngsters in South Africa specifically students, juggling academics, social life, finances may prove to be a bucket full of sweat. It is reported that 70% of students struggle with finances as a result, tend to lose their balancing act and slip into depression. The problem is not, although a contributing factor, having source of income but financial literacy. Financial illiteracy is more common in young adults or students than one may think. Interestingly enough, sometimes the place you are in may influence your way of living, financially. Several studies have found geographical location to statistically influence financial literacy more than economic and demographic characteristics.

Since financial freedom enables financial literacy, which frees you from financial stress and lop-sided spending, wouldn’t you want to get in on that kind of a cool culture of money? Not having to wonder where your next meal is coming from or if your bank will approve your loan? Being financially free enables you to have many options, you are never broke! well that may sound too good to be true but…

Here are ways to achieve and attain financial freedom:

· Side hustle- getting a side hustle is the first step to “short walk to financial freedom”. This will ensure a source of income and discipline. Be that as it may, it does not have to be overtly demanding which will affect your studies. In the contemporary times we live in, it is rather much difficult to find work, so being entrepreneurial-minded will better your chances of getting a source of income. A skill, or an idea that you always had but never believed in it, well now may be the time to believe in it.

· Getting a bank- getting a bank that understands your hustle and acknowledges you being a student takes a little bit effort and lot of sitting-down-thinking.

· Budgeting- drawing financing plans and expenditure is like adding fuel to your car. You will simply not get ahead if you do not effectively plan for you money. The feeling of wondering what happened to your money is the result of not doing your accountings. It does not have to be done in a ledger but a simple detailed plan of how you will spend your money will do.

· Sticking to your budget- consistent budgeting and sticking to it, shows and requires a great deal of discipline and commitment. You tend to also realise or pick up

mistakes you may have done in your budgeting, this helps you in making wise financial decisions.

· Savings- this appears to be the hardest part about the “short road to financial freedom”. However, if your goal is financial freedom, you need a buffer for the unexpected life events that happen to all of us, such as broken appliances, medical emergencies etc. Having the cash on hand to cover an unexpected life event gives you peace of mind and is a critical part of your overall financial plan. Once you have that fully funded savings account, you will start to feel more flexibility in your budget. You will be able to say yes to shopping splurges and specialty lattes with no guilt at all! Since you are not taking on debt, you will also need a savings plan for big purchases that are not emergencies. Let us take summer vacation for example. It is simple! Create a line item in your monthly budget and divide the total amount by the months you must save. You are not living in debt anymore, and that means you can enjoy your vacation instead of having a credit card bill follow you home.

· Do not live above your means- part of making wise financial decisions is knowing what you can afford or buy and still survive with savings on your bank account. Most students or youngsters love to splurge money on temporal things, and this is a great downfall for them.

Financial stress can be a waking nightmare for students or young people, and it can be a huge factor in talented students dropping out of varsity or slipping into depression. financial literacy should be compulsory for young people, especially students. financial freedom can be attainable, and it can be achieved through passive profit. “Passive profit is what you have after your fixed expenses have been paid. It means you still have enough money to live comfortably.” – Joanelle Smit.

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