This skill is crucial not just for personal success but to close the gap between economic survival and prosperity, reduce debt and inequality, and for the country’s overall economic health
Within just one week of implementing the two-pot retirement system, which allows citizens to withdraw up to R30,000 from their retirement savings, R4 billion had been withdrawn, reflecting a worrying lack of basic financial understanding required to make informed decisions about their future. This underscores the country’s pressing need for financial education.
In a country where only 42% of people are financially literate, how can we ensure that South Africans, particularly from lower and middle-income backgrounds, manage their money effectively?
South Africa has introduced coding and robotics into its school curriculum, preparing people for a tech-driven future. But, as we celebrate this progress, the question remains: why hasn’t financial literacy also been made mandatory?
Financial literacy is more than just knowing how to open a bank account; it involves understanding budgeting, debt, saving, investing and long-term financial planning. Without these skills, many South Africans will continue to struggle with poor financial habits, deepening economic inequality.
The financial choices people make today — whether it’s emergency withdrawals, excessive spending, risky behaviours like gambling or not saving — have long-term consequences. It is evident that without a solid foundation in financial literacy, even those who benefit from such systems may face significant financial difficulties down the line.
Other countries have long recognised the importance of financial literacy in their education systems. The United Kingdom, for instance, made financial literacy compulsory in schools as early as 2014. New Zealand also incorporates financial literacy into its curriculum from primary school onwards. These countries understand that teaching people how to handle money from an early age equips them to make better financial decisions in adulthood.
South Africa, with its high levels of debt, low savings rates and widespread financial insecurity, should follow their lead. By teaching financial literacy, we can lay the foundation for responsible financial behaviour that will benefit individuals and society as a whole.
School subjects such as economic management sciences (EMS) are offered in the latter part of primary school and the early part of high school, but only scratches the surface, which leaves learners with half-baked knowledge and creates adults who are not equipped to handle a world where finance is king.
This points to a problem in the department of basic education and the education system in general.Children are taught to cram information and to regurgitate it during exams. This does not effectively test the application and understanding of critical concepts.
Another point is that poor financial literacy is not just a personal issue, it is a national concern that threatens economic stability and deepens inequality. According to the Organisation for Economic Co-operation and Development (OECD), financial literacy is directly linked to overall well-being. It enables people to plan for the future, manage unexpected expenses and avoid the pitfalls of debt.
For South Africans, particularly those from disadvantaged backgrounds, mastering financial literacy could be the difference between surviving and thriving. It could help families escape the cycle of poverty, avoid crippling debt and build generational wealth.
Not too long ago, the closest thing black people had were stokvels. They proved to be effective in pooling money together, but on the odd occasion a member would up and disappear with the funds. Now, South African banks and financial institutions are taking a step towards the light and welcoming stokvels as clients. An article published by Bizcommunity referred to stokvels as the untapped human banks of South Africa. According to the article, an online and video-based study by market research company Ipsos showed that South Africa’s R50 billion stokvel sector is made up of more than 800,000 stokvel groups and 11 million members. The study also found that specialised stokvels are growing in popularity. These groups cater to specific needs such as weddings, investments, property purchases and holidays. This adaptability highlights the collective financial aspirations driving stokvels’ evolution, often facilitated by the ease of communication and coordination offered by technology. While South Africa still has a mountain to climb in terms of financial literacy, this shows that even the unbanked are able to manage their finances.
South Africa is a country that has high levels of debt. It is also a country where far too many people fall victim to money-related scams. Many South Africans experience issues such as depression that stem from financial hardships such as these.
The rise of online gambling in South Africa, especially among the youth, can be attributed to the lack of financial literacy, unemployment and desperation.
Teaching financial literacy early in life instils habits that last a lifetime. Imagine a South Africa where every child knows how to save, budget and invest by the time they leave school. It is not an impossible dream; it is a practical solution to many of the economic problems the country has.
They would learn how to avoid predatory lenders, manage credit responsibly and plan for retirement.
Newly appointed Minister of Basic Education Siviwe Gwarube has outlined her vision for the department, emphasising urgent reforms to address critical issues in the education system such as literacy and numeracy. She stressed her desire to raise a generation of young people who are primed for future economies. As the portfolio with the largest budget, Gwarube has everything in her arsenal to tackle the pressing issue of financial literacy as well.
Lindani Zungu is the founder of Voices of Mzansi and a New York University alumnus, and Enzokuhle Sabela is a final-year journalism student at Durban University of Technology and a 2024 Mail & Guardian 200 Young South Africans winner.