July is Savings Month in South Africa, an opportune time to share savings and investment lessons. Saleem Sonday, dad to four children between the ages of 8 and 19, and the head of Group Savings and Investments, reflects on the money lessons he learnt during his fatherhood journey and how we can impart these lessons to our children or those in our care.
Becoming a parent transforms a person in profound ways. Becoming a dad brought into focus my own relationship with money, informed by my childhood, and how this will shape what I want my kids to experience, and what mistakes I want them to avoid. More importantly, it gave me a clear reason to move beyond saving – to investing.
Given the high cost of education, and how it has historically increased ahead of inflation, it was important to get inflation-beating returns to ensure that I was able to cover school fees in the long term. Now, as my son nears the mid-way mark of his first year as a student, I reflect on the money lessons that being a father has taught me.
Lesson #1: There is no better inheritance than that of education
I am not shy to admit I spend a disproportionate amount of my income investing for my children’s education, through unit trusts. This is because I teach my children that their inheritance is their education, which is what my parents taught me too.
Many people want their children to have something better than what they had, which is why they believe being able to give their children a good education, is key. While this is true for me, I also believe that education is the key to financial independence, which brings me to lesson no. 2.
Lesson #2: Make financial independence a dinner table conversation
My mom, one of twelve children, took control of our family’s finances, which went against the expected gender norms for back in the day. As she was a bookkeeper in my dad’s shop, I watched how diligent she was in recording every penny saved and spent after she taught herself how to read and write, which formed the basis of her financial astuteness. She also had an entrepreneurial spirit and would sell clothing items on layby. I saw how empowering this was, and it taught me a great deal.
This, coupled with my mom’s behaviour around money, showed me how important it is to raise my sons and daughters to be confident when handling money, as well as to be financially independent. It is important that they see themselves as key to their financial success.
Opening an investment account for your child will not only get a conversation about investing started, it will also show them the value of investing for the long term. A tax-free investment account in their own name is a great way to achieve this.
I encourage open conversations. No money topic is ever taboo in our household. I also encourage my kids to have “side hustles” so as to not rely on the “bank of mom and dad”.
Lesson #3: Look for positive, financial role-models for your children
Growing up in a large family from India, my great-grandfather was only able to afford for one of my uncles to receive a formal tertiary education at a reputable, albeit expensive, overseas medical school. Everyone in the family was expected to contribute financially to his education. He would return home every semester and speak to us about his experience. He would also check in with us as kids to make sure we were attending school. He was the genesis for me to be diligent at school so that I would qualify for a formal education.
This was an important lesson and reminds me that children look for people who embody the things they see as successful and important and often emulate their behaviour. The power of modelling good financial habits for your children cannot be underestimated.
Lesson #4: Start investing early, but sweeten it with small rewards along the way
There are two distinct memories I have that inform my financial behaviour – even today.
First, every Monday I would go to the Post Bank to save R5 in a savings account. I would get a stamp in my savings book from the teller as proof of my savings. This started a diligent savings habit from an early age.
Second, I would travel to school by train. On a Thursday I would stop at Salt River Junction in Cape Town to buy a raspberry snowball and a 200ml bottle of Coke; this was a small treat from my pocket money that I spent in the week only after saving money at the Post Bank.
Using investment accounts I have opened for my children, coupled with occasional treats, I do something similar to show them that investing needn’t be a burden, and that it is important to take a balanced view to investing and spending.
Lesson #5: It is ok to stumble, but learn from your mistakes
I also learnt from my parents’ financial mistakes. My father was not very good with money and would take the wrong type of risks. This behaviour resulted in him being sequestrated when I was younger – a painful memory, that still lives with me and shapes my own attitude around risk and many life issues. This was a hard lesson in financial resilience, and what the consequences are of financial irresponsibility. Out of that destruction I learnt to not overspend, be as conservative as I can be, and, to take the right risks.
I also learnt about financial discipline and grit and that it is ok to stumble. A financial setback is common, and there is no shame in making mistakes; what is important is how you pick yourself up and get back on track.
This also means having tough, honest conversations with family, and needing to forego luxuries when things are not going so well.
Remove the barriers this Savings Month
Talking about money was once seen as taboo; but it is up to us as parents to get our children comfortable with the conversation, to invite them to ask questions, and to get them on the road to financial wellbeing.