As parents, we all want the best for our kids. We want to give them a head start in life with the best education possible, so they can break into the workforce. I’m no different. Ultimately, I want my child to be a productive member of society and contribute to the tax base.
However, South Africa has two issues which make this a challenge.
1. Depending on which metric you use, youth unemployment in South Africa sits at between 30% and 40%. Remember that in SA, the South African Revenue Services (SARS) considers you a “youth” up until the age of 29 if your employer is looking to access the Employment Tax Incentive (ETI).
2. Social mobility is a major challenge for the majority of South African youth – the ability to get to and from a job… or even an interview, excludes a number of people getting access to a job.
As a one-car, middle-class family, we certainly don’t have the means to invest in R150 000 of debt to fund a new car for him on his 18th birthday. And at the same time, the words “own transport essential” are dis-heartening if he is about to try and start looking for work.
Most parents of teenagers will be quick to acknowledge that they don’t get a lot right, but one of the things we think we might have gotten right is that we foresaw this challenge about two years ago and started to set some money aside.
At the time, things were tough, and we started out just putting R100 per month into a savings account before diversifying into two OUTvest portfolios and one share account. Depending on how the business has run, we have been able to set aside between R100 and R600 per month over that period of time. If a bonus month came along, we were able to top up the accounts at the same time (the OUTvest “Crowdvest” functionality is great for this kind of saving).
I remember sitting having a beer with a friend and him chastising me that R100 a month would never be able to amount to anything meaningful, especially not a car.
Fast-forward two years and those savings are closing in on R20 000 - and my son still has 6 months before his 18th birthday. While it won’t buy him the “latest-and-greatest”, the money gives him a very nice deposit on either a scooter or second-hand car.
In contrast, the friend, who didn’t believe that an investment goal started with R100 per month, has recently been retrenched and forced to sell his car. He’s now facing the challenge of applying for jobs where “own Transport Essential” decides whether he can get a foot in the door or not.
In the words of investing legend Benjamin Graham:
“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioural discipline that are likely to get you where you want to go.”
We wanted to give our child the gift of social mobility when he enters the workforce and if you share a similar goal then get started today. That first step is always the hardest.
This is why we built OUTvest. Saving and investing, even small amounts, helps people take control over their money. The act of putting money away not only creates a feeling of financial security, but also means that people can achieve things they never thought possible. The behaviour alone can be life changing. Thank you Marc for sharing your story with us – Grant.
OUTvest is an authorized FSP