Do you feel uncomfortable when you hear the terms, ‘investment portfolio’, ‘inflation’ and ‘insurance’? Are you filled with doubt and intimidation at the thought of signing a new investment contract?
Fortunately, you are not alone. Statistics show that 50% of credit active consumers have a negative financial status – they are failing to meet their financial responsibilities to creditors. Amongst the major contributing factors to this is poor understanding of financial basics.
According to a survey of 1000 financially active South Africans conducted by research company Columinate, 47% said they have a fair understanding of their personal finances, 67% spend only one to two hours per week on their finances. Only 32% set financial goals for themselves, and 55% do not even bother to track what they spend their money on.
Boitumelo Mothoagae – Financial Adviser at Liberty, says National Savings Month presents us with a great opportunity to check in on our financial knowledge as a country. “The on-going stats that reflect that we are not a nation that saves a lot shouldn’t deter South African’s from seeking knowledge about finances. More times than not, it is the jargon that can stop people from saving.”
Mothoagae adds, “when you understand your financial needs you are in a better position to make informed decisions and have a better chance at attaining financial freedom.
Connecting with an accredited Financial Adviser also allows you an opportunity to ask the right questions, understand the meaning behind the jargon, and essentially demystify some of the myths that may be stopping one from saving.”
Mothoagae also gives five simple steps to improve your financial literacy:
Step 1: Take a closer look at your bank statements
Print out three months of your bank statements and look at your spending habits. Highlight any transactions that you are unsure of. Once you have done this, call the bank and ask them what the transactions are for. This will give you a better understanding of the fees you’re paying and help you identify circumstances where you are paying too much towards your creditors.
Step 2: Listen to financial news and read investment papers
You’ll discover an exciting world of financial knowledge. If at first you don’t understand the terms and complex jargon in the news, don’t be despondent. Instead, make a concerted effort to find the answers to your questions.
Step 3: Make a list of financial terms you don’t understand
In your research, make a list of all the complex terms and words you can’t understand. Once you have this list, use the technology at your disposal to find the meaning of the words. The internet is a great resource that can help you discover the answers you are looking for.
Step 4: Speak to a financial adviser
At Liberty, we encourage all our financial advisers to debunk the mysteries of financial jargon for our clients. So use this opportunity to get the information you require first hand. If at first you don’t understand, keep asking the financial adviser to explain your products and services in more detail. This will help you know exactly what you need, to make better financial decisions.
Step 5: Put what you’ve learnt into action
There’s no point in learning all the financial terms if you don’t put your knowledge into action. Your knowledge around budgeting, saving, investing and insurance will continue to grow and evolve. Tackle one financial task at a time so that you can maintain full control of your learning process.
“Financial literacy is not something you gain in a split second; it takes time to understand the important elements. Financial Institutions need to make it a priority to improve financial literacy not only for youth but for all consumers,” concludes Mothoagae.