Top six things young adults should be investing their money in

As our country’s economic growth continues to be stunted by high levels of poverty, inequality, and unemployment, financial literacy is becoming increasingly important - more especially important for young adults. Financial literacy equips one with the knowledge and skills to manage money effectively, make informed financial decisions, and plan for the future.

Understanding the basics of finance helps foster a culture of saving and investment, which can contribute to economic growth and individual prosperity.

More and more however, young South Africans are required to navigate complex financial systems, avoid debt traps, invest smartly and start their saving journey so that they can build a foundation for sustained financial stability.

“Strategic financial planning and good money management skills are extremely important in order to achieve your long-term financial goals,” says James Williams, Head of Marketing at Wonga. “We encourage young people to think carefully about where they can invest their money, starting from when they receive their very first salary.” 

“One does not need to earn high income to start investing,” he continues. “I encourage young people to get an early start on managing their finances, and over time find ways to increase their income to help secure their future for the years to come.” 

Williams shares the top five things that the youth should invest in to set them up for a successful financial future:

 

1.   Education: The transformative power of education in unlocking opportunities for personal and professional growth is unmatched. The options are wider with new career paths in technology and digital. Short courses through platforms like Udemy and GetSmarter are fully remote, and are advantageous in increasing one’s income. Alternatively, most universities like the University of Johannesburg, CPUT, UNISA and DUT offer online courses.

 

2.   Entrepreneurship: Unemployment is at a staggering 32.9% in South Africa, and many young people are being forced into creating their own income stream. The Wonga Side Hustle Survey conducted in 2023 found that the more time spent on a side hustle, the better the chances are of growing it into a sustainable venture and potentially a main source of income. Respondents who spent over four hours a week on their side hustle make between R5 000 and R10 000 per month, showing that investing time into their businesses results in higher income. Those wanting to benefit off side hustles can look for opportunities within their community that need a solution with low capital costs or use their skills to offer tutoring services in a subject you are passionate about, or offering an after hour mobile nail bar service for working individuals or stay at home moms, The list is endless.

3.   Property: Property can be a stable and lucrative investment option, and can be considered ‘good’ debt. Investing in property allows an individual to acquire larger and more capital-intensive assets. It is important to repay these consistently and on time as per the agreement with the bank, as this builds a good credit profile and opportunities to access preferential interest rates.

4.   Savings and emergency funds: Preparing for unforeseen circumstances is a safe way to ensure that financial goals are met and avoiding having to take out unnecessary credit. A simple example is having to replace car tyres in the middle of the month or repairing equipment for a side hustle. Make saving a habit using various options that cater for short and long term saving and shop for savings account options that can earn you higher interest.

5.   Health and wellness: Health and wellness is true wealth. Prioritising these reduces medical expenses, earns loyalty points and most importantly enhances overall mental and physical well-being. Start early to take care of your health by participating in wellness programmes such as Vitality, or Adidas and Nike running clubs to earn points from healthy lifestyle habits. It is also a great way to network with other like-minded people.

 

“As personal finance becomes more digital, financial planning and how you manage it are constantly changing,” concludes Williams. “Staying educated and informed helps you choose a better path on how you manage your money.”