The society of today is geared towards seeking instant gratification in almost every facet of life, however, when the desire for immediate reward is brought into money management, alarm bells should start ringing.
According to DebtBusters, on average, South African consumers were spending 65 percent of their take-home pay to service debt.
These statistics are discouraging because South Africans are known to have a poor savings culture.
Christelle Louw, Advisory Partner, Citadel shares financial advice for families who are planning for the future.
Parents should encourage their kids to practice good money management
Parents want to provide their children with the benefits and advantages they never enjoyed themselves and they spend a lot of money on satisfying the instant gratification of their kids.
Louw said that the biggest gift parents can bestow on their children that can be beneficial for their financial future is long-term rewards that grow over time.
Parents should instil in their children the principles of wise financial management and get them involved in budgeting and saving to demonstrate the gains that are made when they have a solid foundation.
Louw recommends a savings plan to which parents could contribute the same amount as the children save.
“It is encouraging to see the amount grow, and to start understanding what the concrete benefits of these savings will be down the line,” Louw said.
Remember to teach them the basic principles: don’t spend what you don’t have, delay spending, plan ahead and reward yourself when you have reached a financial goal.
Teenagers can benefit from thinking long-term
When parents start pointing out to their teenagers that saving can help them lead a satisfying lifestyle, it will catch the attention of their kids.
Little or no understanding of financial management, and the lack of financial skills can lead to a repetitive cycle of spending for immediate gratification, accumulation of debt and increasing poverty.
It is advisable to have a trusted financial advisor as a sounding board and a professional who can provide expert input and help you plan feasible and attainable short- medium- and long-term goals.
“Contact a financial advisor who specialises in creating long-term strategies, not quick fixes. Knowing what you need per month and how you need to finance your long-term goals will enable you to devise a financial strategy for your lifetime,” Louw said.
You may enjoy temporary pleasure from splurging today, but a proper financial plan will ensure that you reap the rewards of a lifetime.
IOL Business