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Instant versus long-term reward: Be wise with your finances

Surveys conducted by organisations such as PricewaterhouseCoopers and the South African Reserve Bank show that South Africans are spending 70% of their take-home pay on debt. File Image: IOL

Surveys conducted by organisations such as PricewaterhouseCoopers and the South African Reserve Bank show that South Africans are spending 70% of their take-home pay on debt. File Image: IOL

Published Jan 7, 2022


Today’s society is geared towards seeking instant gratification in almost every aspect of life. It is reflected in daily lives through the expectation of fast foods, instant coffee, drive-thru restaurants, drive-thru banks, content-on-demand and countless online facilities. However, when this desire for immediate reward is carried into financial management, alarm bells should start ringing.

Surveys conducted by organisations such as PricewaterhouseCoopers and the South African Reserve Bank show that South Africans are spending 70% of their take-home pay on debt. These statistics are disconcerting, because they indicate that very little is available for savings, which does not bode well for future outcomes. In fact, according to a case study conducted by CreditGateway, 51% of an employee group were in financial distress.

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Christelle Louw, Advisory Partner at Citadel analyses some of the reasons for this situation and provides invaluable financial advice for families who are planning for the future.


“Parents normally want to provide their children with the benefits and advantages they never enjoyed themselves, and unwisely lean towards material things and spending a lot of money on their children’s instant gratification. But the biggest gift they can bestow on their children as well as on their own future, is the long-term rewards that grow over time. They should be inculcating their children with principles of wise financial management, getting them practically involved in budgeting and saving, demonstrating the gains that are made and the solid foundations being built for their futures.”

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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. Counter the glitz and glamour to which children are being constantly exposed through social media and celebrity marketing, by explaining the difference between being rich and being wealthy. Rich is mostly spending of cashflow, looking the role, seeking the limelight – wealth is the accumulation of assets which is less spectacular and showy but has solid and reliable results.

“Children can learn from an early age that it is not the flash-in-the-pan status that counts but the long-term stability. You could do online searches on successful investors, such as Warren Buffet, or even make a collage of the goals you want to achieve with your children. And along the way, remember to include small rewards for aims attained to encourage your children. Teach them basic principles: don’t spend what you don’t have. Delay spending and plan ahead. Reward yourself when you have reached a financial goal.

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“Of course, inculcating in children an appreciation for finer things: family, friendships, nature, art and the happiness that money cannot buy goes a long way to helping them to get their priorities in life properly balanced.”


When it comes to convincing teenagers to save, Louw has a number of useful tips.

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“When you start pointing out that saving will create opportunities for travel, a good education and a satisfying lifestyle, you catch their attention. With savings they will be able to enjoy university to a greater extent, perhaps even purchase a vehicle and will be creating opportunities for their life with more choices. Having options and choices is a very powerful motivator.”

It is a fact though, that in South Africa, a large percentage of the population has 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. Louw points out that often, first generation executives often plunge into elaborate lifestyles, frequently changing employment and sinking into debt, to the extent that they end up in financial distress.

“However, the other side of the coin is that there are those who have witnessed their parents’ unwise choices and have determined to break the cycle. So they focus on financial stability, wise management and financial options with a goal to leaving a financial legacy.”

“In all financial management and planning though, 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. This is especially the case if you find yourself in an emotional rut, where you are unable to make objective decisions. Fear, despondency or desperation can play havoc with any financial plan, and the advice of a professional is crucial in these circumstances.

“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. You can enjoy temporary pleasure from splurging today, but a proper financial plan will ensure that you enjoy the rewards over a lifetime, and provide you with lifestyle choices in the future.”


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