Many students are battling to repay their debt according to a survey, showing that they need to learn how to manage their money better.
In a time when the whole world is battling to make ends meet, it is more important than ever for students to manage their money to ensure that they reach financial success instead of financial distress.
As Youth Month comes to an end in South Africa, many students may feel they deserve to celebrate but according to a survey done by Old Mutual in partnership with South Africa’s TVET colleges, many students are battling to repay their debt, with 14% skipping classes due to financial difficulty.
This highlights the dire need for intervention, says John Manyike, head of financial education at Old Mutual.
Although most students (72%) are confident in their ability to manage their finances, the overwhelming majority (78%) do not know how to budget properly.
Manyike says this is one of the core findings of a survey Old Mutual conducted among 727 students between the ages of 18 and 25 at Technical and Vocational Education and Training (TVET) colleges across the country.
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Students have a budget, but do not stick to it
The survey found that 52% of the participating students confirmed that they have a budget, but do not always stick to it, while another 25.7% admitted that they do not have time to budget. Only 22% of the respondents managed to have a budget and stick to it.
“The survey findings show that there is a marked discrepancy between students’ perception and reality. While most students feel they are in control of their money, the fact that the majority of them do not budget properly would indicate otherwise.”
Another key standout from the survey is that 11% of a smaller sample group of 249 students have some kind of debt, with 20% of these students indicating that they are not coping with their debt. Over 14% of those surveyed said they sometimes or often miss classes due to financial difficulty, Manyike points out.
“This is one of the crucial messages that we emphasise in our training, the importance of driving down bad debt and using good debt wisely. Unfortunately, many young people feel that they do not have a good handle on their debt and need help understanding how to gain control of it.”
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Only 28% of students save regularly
A further insight from the survey is that only 28% of respondents save regularly. “Protecting and investing your wealth is another lifelong habit that we highlight in our training. Again, students need help in this area. Many feel they do not have enough money to save or invest, but the truth is that the earlier you start on your investment journey, the better – and every little bit counts.”
While the baseline data show concerning trends in terms of budgeting, saving and debt management, the research nevertheless proves that even short interventions can build real financial capability among the youth, Manyike says.
In the pre-assessment survey, students reported being only 41% financially confident, but after the training, this figure improved to 57%.
Similarly, only 28% of respondents said they were financially informed before the training, but afterwards 48% said they believed the training improved their financial knowledge.
“This makes a strong case for the value of financial education in helping young people make informed decisions and build financial resilience,” he says.
