KAFI HQ

Young people and personal finance management

By Quegas Mutale, Zimbabwe

Introduction

Having skills for personal finance management is key for young people as it helps them make money decisions that help build sustainability. Personal finance involves financial planning, money management, income and assets protection, investments, and retirement planning, amongst others. This article covers some of the aspects of personal finance highlighted, with a bias towards young people. It defines key terms related to personal finance. The World Bank (2025) acknowledges the high unemployment levels. This calls for education on personal finance, especially amongst the young people. The Reserve Bank of Zimbabwe (2023) reports low financial literacy levels and financial capabilities. Financial literacy levels remain low. It is estimated that between 70 % and 76 % of Zimbabweans are financially illiterate, despite a high academic literacy rate of over 93 % (Zimbabwe Independent, July 18, 2025). This affects young people more. Hence, this article teaches on basis of personal finance. Contents of this article contributes towards the attainment of the KAFI HQ goal of promoting financial literacy and inclusion. n Zimbabwe, young people make up a large and growing share of the population, with those aged 15–34 constituting about 62 % of the total population of approximately 15.8 million in 2022, underscoring the importance of youth-focused financial inclusion policies (National Inclusion Strategy II, 2022-2026).

Understanding personal finance

Personal finance is an activity that involves all the individual financial decisions, which includes budgeting, saving, insurance, and mortgages (Rubing, 2017). Understanding personal finance helps young people to be good stewards of their money and other resources. Young people must understand the golden rules of personal finance. The golden rules are spending less than what one earns and planning for the future always. Interaction with secondary school learners in Zimbabwe’s rural areas indicated that learners rarely plan for their future financial goals, though they plan for other aspects of life. Young people must focus on making their money to make more money. Although saving is important, youths need to focus on investing their money so that they generate more income from the little they get. There is need to track spending. Without tracking expenses, young people face a risk of channelling funds towards things that are of less importance in their life. Linked to personal finance, financial literacy helps a young person (18-35 years old) to observe the 50/30/20 rule. This means that no matter how small the amount earned is, young people need to realize that of their income, 50% must address needs, 30% meet the wants and 20% channelled towards savings. Young people must avoid saving without a specific goal. For instance, they can save towards enrolment into college or university, construction of a house, starting a micro-business or any other reason.

Personal finance revolves around income, spending, saving, investing and protection. Income refers to the source of money which may be wage pr salary, family, friends, parents, pensions or dividends. In Zimbabwe, a large proportion of the population—about 87 % of employed youth—work in the informal sector, highlighting the importance of financial management skills for survival and growth outside formal employment structures (The Independent, February 24, 2024). A financially literate youth can make wise expenditure decisions. Young people can spend either in cash or credit buying. Funds may be spent on food, school fees, entertainment, rentals, travel, etc. youths need to manage their expenses, ensuring that they fall within the income, and not beyond. They have to live within their means and avoid bad debt. Saving is a form of keeping money for future use. Young people are encouraged to use different methods of saving such as joining KAFI savings groups in the community, saving through the bank, using piggy banks. It is important to note that saving alone is not enough as money should generate more income. This calls for young people to invest their funds into business. A business can help generate more income. Funds can be invested through real estate, mutual funds, stocks, commodities, etc. protection involves a wide range of products and services such as life assurance, health insurance and estate planning. Youths need to seek professional advice on how to use funds and make appropriate investment decisions. Professionals help young people to understand and develop personal finance management skills. In Zimbabwe, for instance, the local Non- Governmental Organisations provide free training to youths and young entrepreneurs on financial literacy, including concepts on personal finance, budgeting, investment and so on. One can also seek professional assistance from people they stay with in their localities. Where possible, one can join fellowships and online courses to help with managing personal finance such as the Kick Against Financial Illiteracy (KAFI) training offered by KAFI HQ. Young people can engage into practical experiences of managing personal finance. An example is engaging in a savings challenge for a period of two weeks.

Financial planning

Personal finance involves financial planning. Rubing (2017) describes the personal financial planning process which involves gathering information and evaluating current financial situation, setting financial goals, developing financial plan, implementing the plan, and reviewing the implementation and revising the plan. Dr. Mahesh Kumar Sarva defines financial planning as the process of meeting your life goals through the proper management of your finances. Financial planning includes activities of assessing one’s finances and listing down goals (short, medium and long term). In other words, financial planning is the process of systematically planning your finances towards achieving your short-term and long-term life goals. Examples of short-term goals are planning to buy a car. Medium term goal includes taking a child to school. House construction is an example of a long-term goal that a young person can make. Only a clear plan can help a young person to achieve these goals.

The financial planning process

The personal financial planning process is according to ISO 22222:2005 six-step processes which are as follows: determining your current financial situation; developing financial goals- living within your means, spending less than you earn, getting rid of loans and debts; identifying alternative courses of action; evaluating alternatives; creating and implementing a financial action plan, and reevaluating and revising the plan. A young person should have a solid plan on how to use or invest funds. The financial planning process also involves assessment, goals, plan development, execution and monitoring and reassessment. A detailed understanding of the financial planning process, and its practical application helps young people to properly plan for their finances.

Personal financial management

Personal financial management refers to all financial decisions and activities of an individual, that could include budgeting, insurance, savings, investing, debt servicing, mortgages and more (Jelgava, 2017). On this note, successful management of money includes managing income, managing debt, and managing savings and investment. Jelgava (2017) shares the advantages of personal financial planning include: increased effectiveness in obtaining, using, and protecting your financial resources throughout your lifetime; increased control of your financial affairs by avoiding excessive debt, bankruptcy, and dependence on others for economic security; improved personal relationships resulting from well-planned and effectively communicated financial decisions; having a sense of freedom from financial worries obtained by looking to the future, anticipating expenses, and achieving your personal economic goals.

Components of a Financial Plan

In a financial plan there are personal finance decisions related to six major areas. Budgeting, managing your money, financing large purchases, protecting assets, investing money, planning your retirement, and tax planning (Raveendran, nd). Young people must understand the different types of taxes that they should pay. For instance, if the business has employees exceeding US$100 threshold in Zimbabwe, the business owner should remit the Pay As You Earn (PAYE) to the Zimbabwe Revenue Authority. The PAYE is deducted from the employee salary. Issues to do with social security, life insurance, life assurance, medical aid facilities and others must be considered and understood.

Importance of personal finance education

The main purpose of personal finance education is to positively influence financial behaviour. It has been observed that such education is delivered more effectively to younger children than to their older counterparts. Knowledge of personal finance is beneficial for everyone in many ways (Raveendran, nd). Personal finance education helps young people to make their own financial decisions. Thus, in Raveendran’s words, an understanding of personal finance helps one to take informed decisions about their financial situation. It also instils financial discipline. Without finance education, young people may make reckless decisions about their finances.

Essentials of personal finance

There are key things essential about personal finance. For instance, the scope of personal financial planning covers different aspects of your life: earning, saving, expenses, budgeting, taxes, insurance, loans, investment, debt management, estate planning etc (Jelgava, 2017). On this note, one has to set financial goals, create a plan, stick to the budget, get out of debt, and ask for financial advice.

Personal finance apps

To properly manage personal finance, one needs to understand the apps that are applicable in that context. The apps help with budgeting and managing personal finance. The selected apps must be user friendly and also affordable by the user. Examples of apps that one can use are Acorns, Mvelopes, Mint, Rocket money and You Need A Budget ((YNAB). These apps make it easier for young people to manage their finance.

Budgeting

Personal finance involves budgeting. InCharge Debt Solutions define a budget as a plan for the money you make and how you spend it. Regardless of how much money a young person earns, they have to make a budget. This helps them to allocate funds responsibly. It is important to note that it is never too early to conduct a budget, as long as one earns a certain income. A realistic and flexible budget helps to track income sources and expenses and categorize expenses according to priorities. When budgeting one needs to set aside emergency savings for 3-6 months. InCharge Debt Solutions in their 17 Financial Tips for Young Adults: Budgeting Made Easy warns against not implementing the budget as it becomes just a wish list. So, the young people are advised to set spending goals and abide to them. Excess money from the budget needs to be channelled towards savings. Young people must be aware of the different types of budgets. Zero based budget, for instance relate to spending funds until there is zero balance. The pay your first budget means that one must prioritize savings before any other expenditure. The envelope system divides money for different purposes which is put in envelopes. In this instance, there can be different envelopes for water bills, food, educational expenses, etc. Upon spending, young people are encouraged to pay with cash and avoid buying on credit. Loans with very high interest rates eat into the little finances that one may have.

Conclusion

Providing personal finance education to young people is important. This will make them grow into adults who understand the basics of personal finance. Such people will be able to make sound financial decisions. This article suggests that young people enrol into financial literacy courses offered by institutions such as KAFI HQ. Ignorance of personal finance management is deadly for young people as they may fail to meet their life goals. Therefore, it is the role of KAFI HQ interns like me to promote personal finance education amongst the young people aged 18-35 years in Africa and beyond.