Peer pressure does not only affect impressionable teenagers – we all have an innate urge to evaluate our progress against those around us. As parents, we also want the best for our children, often going beyond our means to make this happen. Sending your child to one of the best public schools in the country can set you back R63 000 per year while elite private schools can cost north of R200 000. Trying to keep up with the Joneses can land you in deep financial difficulties. Adopting a few financial hacks, you can still give your children great opportunities without compromising your financial wellbeing.
Ayanda Ndimande, Business Development Manager of Retail Credit at Sanlam says, “As parents, we are always on the lookout for the best ways, tools, and resources to raise our children. For first-time parents, this may mean feeling that you need to have the most expensive pram, the latest toys, must-have gadgets and clothes, only for the child to outgrow them in a few months. By reorientating that desire toward your child’s long-term prospects, you can help build a strong financial foundation that your children can use as a launchpad for their lives.”
Taking advantage of these three simple tips can help you avoid debt traps, achieve your goals, if you feel as though you need to keep up with the Joneses.
Build A Healthy Relationship With Your Credit Score
If you’ve ever taken out a loan, registered a bond, applied for a credit card or even a cell phone contract, you’ll most likely have a credit score. Your score tells prospective lenders how much of a ‘risk’ you are in terms of your past debt repayment behaviour. It looks at your transactional records and gives you a score, ranking you as low, medium, or high risk. Your credit score is a living number that fluctuates depending on your debt repayment behaviour.
The Sanlam Credit Dashboard allows you to do a free credit score check and credit coaches can help you to better understand and manage or improve your credit score. The pressure to keep up appearances can often lead people to take out loans or dip into their credit. Not all debt is bad but going into debt should be carefully considered and geared toward useful long-term benefits.
Ndimande says, “Whilst trying to do the best for our kids, it helps to also have a longer-term view. Think about the financial position you want to be in in the future. Knowing your credit score will help you do this.”
Talk To Your Kids About Money
When we try to keep up with our peers, friends or colleagues we often end up spending without thinking and going deeper into unplanned debt. Your children learn life-long financial habits – both good and bad – by watching the way you manage your money. By speaking to your children about money, helping them track their spending and open savings accounts, you can equip them with the tools to be able to buy their toys and be more considerate when they do. The Sanlam Savings Jar app is a great way to do this.
Remember That Social Media Isn’t Real Life
While it is entertaining, remember that social media is often a sanitised and curated view of people’s lives. Through the power of angles and filters, it is very easy to make things seem grander than they are. We often know little about people’s finances when we look at their posts. It is also important to be kind to yourself, we all have different goals and will take different financial paths to reach them.
Ndimande concludes, “Not owning the latest gadget or sending your child to a school that costs a quarter of a million rand a year is not a reflection of your success. We all have different lives and needs and comparing ourselves to others can negatively affect our mental health. Shift your focus towards long-term goals and put the necessary plans in place to make them a reality.”