Do you know where your parents are putting their money?
17 May 2018 FINANCE
By Nomali Cele
How to give your parents financial advice
If you are lucky, there will come a time when your parents need your assistance in things of money management and planning. I say if you are lucky because for you to get to an age where your opinions are considered well-informed and your parents are still around to see it, is a blessing. How will you use this power and what is the best way to give your parents financial advice?
A good place to start when you give your parents financial advice would be to check where their surplus money goes. There are services that have, over the years, preyed on older people’s technological ignorance to syphon their money. The saga of disappearing airtime has long plagued our older generations and the scams don’t end there.
Here are few places your parents are potentially putting their money and the situations that should raise red flags for you.
How to give your parents financial advice about stokvels
Your mother has probably been doing all her different stokvels since before you were born and she’s and an expert at it. However, if your parent is joining a new stokvel that’s outside of her usual pace of things you are within your rights to check it out.
If you feel that your parents are oversubscribed to too many stokvels that show no gains or variety, have a chat with them about it. Do they really need to be part three grocery stokvels?
The thing that makes pyramid schemes irresistible is that it has a premise of “working hard” or “doing good” for your money. Isn’t that something your good faith parents would find irresistible? Not only as participants but also as marketers and that’s how pyramid schemes thrive.
So if the next time you speak to your parents and all they can talk about is the great opportunity they’ve been recruited to and for which they are recruiting others, know that something
How to give your parents financial advice about funeral covers
In a perfect world, your parents would be card-carrying members of one mainstream funeral cover and one burial society only. But that’s rarely the case what with funeral policies being sold everywhere from television to the corridors in malls. The monthly instalments on these extra funeral policies do not accumulate and the money would be better spent in a different kind of investment. Help your parents find an investment that would require the same amount.
The R99 and other debits
The R99 debit order has been plaguing most South Africans banking with commercial banks. Your parents are unlikely to be immune. The phenomenon has been happening for a few years and is characterised by unknown and unauthorised debit orders going off on people’s accounts. The banks have been unable to account for the transactions. As you check your statements and file queries with your bank, do the same for your parents. The money does add up in the end.
Listen to the Good Friday team and Afropolitans share their R99 debit stories:
It’s important to keep an eye on what your parents are expected to donate to their places of worship. If we’ve learnt anything in recent years in South Africa is that there are plenty of charlatans out there prepared to take advantage of others. Do you think your parents would rather donate to a pastor’s fund or help save for their grand children’s future? When advising your parents, it’s important to make them seem the better ways they could be investing their surplus income.
If your parents trust your judgement when it comes to money and terms and conditions, why not suggest that they run all new sign-ups with you? That means all the telesales people and people selling policies and schemes in malls will have to wait until you and your parents have discussed the policy or investment.
If you can give your parents financial advice to a point that it frees up more of their surplus income, the next step is convincing them to chat to a financial advisor about investment options in which they can put their money.