By Palesa Matlala
• Young people should understand the difference between harmful debt and borrowing that could help them build wealth or improve their earning potential.
• Saving remains important, but Sanlam says long-term investing and multiple income streams can help younger workers deal with today’s changing financial world.
Your parents probably meant well when they told you to avoid debt, save every cent and find one secure job for life.
But following those rules exactly may no longer be enough.
Young South Africans are building their financial lives in a world where property is harder to afford, careers change more often and one salary may not always provide enough security.
Lee Hancox, head of channel and segment marketing at Sanlam, said the old lessons were still useful, but some needed updating.
“Our parents could plan around a more predictable path. For example, many started in one company and stayed there,” she said.
“Today, people tend to change focus areas and often have more than one income stream.”
Property is another challenge.
Hancox said many young people struggle to get started because buying or renting a home has become less affordable.
So what should change?
One of the biggest lessons passed between generations is to avoid debt.
Hancox said that remains good advice when people borrow money to pay for a lifestyle they cannot afford.
Credit card interest and retail accounts can eat into money that could otherwise be saved.
But she said not every form of debt serves the same purpose.
Borrowing for education or property, for example, could potentially improve future earning power or help someone build wealth.
“You should treat debt as a tool, not as extra income,” Hancox said.
Before borrowing, people should consider what they are buying and what it could be worth in future.
“A car that loses most of its value in five years is a very different decision from a qualification or a home.”
The second old rule is to save every cent.
Saving still matters, particularly when building an emergency fund. But Hancox said keeping all your long-term money in cash could mean losing buying power to inflation over time.
“Cash gives you security. Investing allows your money to grow. And young people need both,” she said.
An emergency fund can be especially important for people with irregular incomes.
It can help when a contract suddenly ends, a client pays late or an unexpected bill lands.
And people do not necessarily need large amounts of spare cash to start.
“Even if you can only put away R200 a month, do it consistently. Time and compounding can do a lot of the heavy lifting.”
Then there is the career advice many people grew up hearing: find a good job and stay there.
For previous generations, spending decades working for one employer could provide stability.
Hancox said today’s working world is different.
People change jobs, freelance and earn money through newer opportunities such as the content creator economy.
“The world has shifted from a single, predictable career path to one of flexibility and adaptability,” she said.
Instead of relying only on one job, she said people should build different skills, continue learning and, where possible, develop more than one source of income.
But earning money from several places creates its own problems.
Freelancers and people with irregular earnings still need to save for retirement, prepare for tax and build an emergency fund for months when less money comes in.
“You have to establish non-negotiable habits if you are earning an irregular income, like paying yourself first,” Hancox said.
She recommends automatically putting money towards savings and retirement where possible.
People with complicated tax affairs can also consider speaking to a financial adviser or tax practitioner before mistakes become expensive.
Hancox said changing your approach to money does not mean throwing away everything your parents taught you.
Instead, younger people can look at which lessons still fit their circumstances.
She suggests starting by examining your own financial habits and asking why you make certain decisions about money.
Families should also talk openly about money.
Young adults who live with their parents or help support relatives can discuss how much they can afford to contribute to household costs and how much they need to keep for their own savings.
The old financial rules are not necessarily wrong.
But as jobs, housing and the cost of living change, the way people apply those rules may have to change too.
Pictured above: Young South Africans are being encouraged to rethink some traditional financial advice.
Image source: File.
