TUMISANG NDLOVU: In this week’s Money Lesson segment we speak to Nsfas head, former FisrtRand chair and chartered accountant, Sizwe Nxasana, welcome to Money Talk. What has been your biggest money lesson over the years?
SIZWE NXASANA: The biggest lesson is regardless of how much money you have; sometimes we confuse needs and wants and that’s always more than the amount of money that we have. So it doesn’t matter whether you are a weekly wage earner or a monthly wage earner, or maybe you are a business person who gets money occasionally, and sometimes there are people who get lump sums of money all at once.
TUMISANG NDLOVU: How did you get to that money lesson and having to unpack it and apply it to your own life?
SIZWE NXASANA: As you know, I have been working for many, many years and I started off working as a labourer in my much younger days where I remember my weekly wage was R14.96 a week…
TUMISANG NDLOVU: Wow.
SIZWE NXASANA: …and obviously that was many, many years ago now but I learnt my lessons even then because you think you have a lot of money at the end of the week and before you realise it, when you go back to work on Monday, all that money is finished. This goes back to the point I was making that there are always a lot more needs for money than there is money available.
TUMISANG NDLOVU: How has that then shaped your view of money and its handling as you grow older and enjoy the fruits of your labour, do you still use the same principles?
SIZWE NXASANA: The principles that I’ve learnt is that you have to continue to save money and invest money so that you can try and maintain a certain standard of living. As I was saying, sometimes you think there’s a lot of money and the needs are always there and the demands for money are always there, and one needs to always exercise discipline.
So what I’ve learnt over the years is to discipline myself in terms of how I use and invest money.
You try and stick to that target, in other words, the budget that you may have set for how much you should use for consumption and how much you should use for investment and how much you should have at the end of the day as some discretionary money because invariably there are always things that happen that you never estimated or budgeted for.
For instance, your car breaks down or something breaks down at your house and you did not anticipate that you’re going to have that unexpected expenditure. So you should still keep some money for some of those unexpected eventualities.
South Africans live beyond their means
TUMISANG NDLOVU: Having worked in the financial sector, in your view, is there enough education around the handling of money in South Africa?
SIZWE NXASANA: South Africa is known as one of those countries that have people who live beyond their means. So if you look just generally at our culture of savings it is very low and we almost behave like some of the countries that have very high levels of household debt. So I think as part of our education we have to continue to educate our people about the importance of saving money. Some of the things that are probably ascribed to the reasons why we do not save as much is because the country provides a safety net, in other words for people who are unemployed the government always provides some safety net in terms of social grants and so on, which is one of the reasons why we explain people don’t save. Whereas in countries where there is no safety net, in other words you see yourself to finish, if you haven’t saved money you don’t starve, you find that typically those countries have a much higher rate of savings than where we are in South Africa.
TUMISANG NDLOVU: That said, in your role as Nsfas chair what are your views on the issues around the funding of tertiary education currently in South Africa, there are various debates of no fee tertiary education, there are also debates about parents needing to prepare for this eventuality or students themselves taking it upon themselves that this is how I’m going to help and buffer the parents in ensuring that I get further education.
SIZWE NXASANA: I do think that for poor students, in other words students who come from poor backgrounds, we should be able to support those students in the form of grants and in the form of bursaries. But for parents who can afford it and here I’m talking especially about parents who earn above a certain threshold, let’s say, for instance, from somewhere around R120 000, R150 000 there should be some cost sharing arrangement.
So the state should provide some financial support but there should be some contribution that also comes from not just the parents but maybe deferred payments for those people who may have benefitted from that level. So there should be some sliding scale that applies to those students who come from backgrounds that can partially afford and then on a sliding scale until you get to a level of parents who can completely afford it they should be able to pay for their children.
TUMISANG NDLOVU: What was your story going into tertiary?
SIZWE NXASANA: The first thing is I mentioned I was a labourer even before I went to university and that was because I did not have money to go to university. So I had to go and work and save up some money and apply for loans and some bursaries, so I had a partial bursary but at the end of the day I got a loan from one of the banks and that’s how I managed to then get to university. But this was then though and that’s why I was saying just looking at where the country is I do think the country can afford to provide fully subsidised education, especially for students who come from poor backgrounds.
Financial education in schools
TUMISANG NDLOVU: How then would you advise a young person entering the job market on the handling of money?
SIZWE NXASANA: I think financial education should actually start at school because very often you find that by the time that people get to university or higher education like colleges and so on, at that stage they have to make a lot of decisions sometimes that are really important and very big decisions about their lives and about their education, about how they handle money and so on. If they have not be prepared beforehand, in other words when they were still at school, it can really become a problem because we find in a lot of cases students at universities or colleges think they have money, they have to handle money for their education, as an example, but they were not really trained how to handle money.
Very often you find a lot of cases where students may waste money, believing that they had enough money and only to realise midway through the year that, in fact, the money that they thought they had was not enough to cover their needs in terms of education or for books, accommodation and even food for that matter.
TUMISANG NDLOVU: Having answered that, do you remember what you did with your first ever paycheque?
SIZWE NXASANA: Well, it wasn’t a lot, as I said, my first paycheque was actually not a cheque, it was an envelope containing money, it was R14.96 and that was enough to pay for my transport and a little bit of food. So that’s what you worked for, you worked for transportation and food, fortunately I stayed at home then.
I saved up a little bit of money and whatever you saved up was spent on basic needs like clothing. So there wasn’t really much left to save.
TUMISANG NDLOVU: Do you remember then being taught about the handling of money at a young age?
SIZWE NXASANA: For starters in my own family and in my own household there wasn’t enough of it to go around. So I just knew that my parents made do with whatever little they had and I had six siblings, so there were seven of us and we had to survive with money that was really not enough. So we knew the importance of making your money stretch a long way because that’s what my parents did.
TUMISANG NDLOVU: Lastly, what is your ultimate money goal?
SIZWE NXASANA: Well, I’m not really retiring, at my age I’ve started new companies, so I’ve put some of my money at risk of starting new businesses because I think it is important for the country to also have entrepreneurs and people who are employment creators. There are risk associated with starting new companies and being an entrepreneur but that’s also how you grow economies because not all of us must sit and wait for someone to give them a job, you also need people who are job creators. But there are risks associated with that and I’m one of those people who are prepared to put our resources at risk to start new businesses and grow new enterprise.
TUMISANG NDLOVU: Thank you so much for your time, it’s an absolute pleasure having heard your story. That was NSFAS chair, former FirstRand chief executive and chartered accountant, Sizwe Nxasana, in this week’s Money Lesson segment on Money Talk on Mix 93.8 FM.