Steven Amey | Three financial literacy truths I wish I knew at 20

If you were 20 today, and could learn about investing from scratch, you might be surprised to learn that it is not just a privilege reserved for people with a lot of wealth. It is in fact much more accessible than you might imagine, because it is all about the small things – and three small things to be exact. 

Do the small things really matter?  

They certainly do, and here are some interesting examples. 

Did you know that all people are genetically 99.9% similar, yet the 0.1% difference makes us all so unique. And did you know that if a plane incorrectly sets its course with a 1% error rate, it can have a dramatic impact on where it lands? A 5h30 flight from Los Angeles to New York, with a 1% flight path deviation, would result in the plane landing 239km off course. Lastly, and this one is close to home, did you know that in the 2024 Olympics, our very own super athlete, Akani Simbine, missed winning a medal by one hundredth of a second, 0.01 seconds was the difference between receiving an Olympic medal and not.

So now that we have established how the small things can have a profound impact on outcomes, let's see what you can start doing to help your future self financially. 

Lesson 1: Look at the small picture  

Sometimes you need to look at the small details to get ahead in life. Many people complain about not having enough monthly income. To resolve this issue, you could search for a higher paying job, work a second job or play the Lotto, and these take time or may never materialise. Budgeting, on the other hand, is a much surer bet. Over two decades of experience has taught me that you can always find where to cut back, be more financially free and start investing, even if just a little, for your future-self. 

The sooner you start to invest the better. I love the old Chinese proverb, "the best time to plant a tree was 20 years ago. The second-best time is now." Don't wait for the right time, time isn't waiting for you. If you feel overwhelmed, contact a registered financial adviser or visit an asset management website where you will find different funds to suite your needs. 

Start by transitioning from a motivational to a disciplined mindset. An emotionally stunted person utilises motivation to do something difficult once, while an emotionally mature person utilises discipline to do something difficult a thousand times. It may be difficult to start saving yet look at what the disciplined investor achieves over time. If you start at age 25, investing just R1000 a month, until you are 55, you'll end up with an impressive R1,5 million*!" 

Lesson 2: Go small or go home 

To fill a glass jar, people usually start by adding bigger pebbles and then regard the jar filled, when adding thousands of tiny granules of sand will ensure the jar reaches its true capacity. Don't wait until you have bigger chunks of money before you start investing. True success isn't about chasing big wins, it's about getting the small things right, so that the big things can follow. Some of the biggest success stories in the world, started small.  

Here are some examples from well-known people on starting small and growing from there. Madiba tended herds of cattle in Qunu but went on to go to university and become the leader of the ANC and South Africa's first democratically elected president, a true world icon. Business tycoon Herman Mashaba founded the haircare range Black Like Me, after growing up in poverty in Hammanskraal, and starting his company with just R30 000. Legendary businessman Raymond Ackerman was fired from his retail job in the late 1960s when he purchased four Pick n Pay stores and grew these over the years into what today is one of South Africa's premier retail chains. 

These stories all teach us that even from humble beginnings, greatness can follow if you just persevere. Ultimately, it's all about putting one small foot in front of the other.   

Lesson 3: Be a small deal 

In our consumer culture, we often feel the pressure to stand out and flaunt status. But what if there was more value in rejecting status anxiety to pursue our best life? What if real success was more about quiet self-reflection to see where our innate vulnerabilities and biases may be tripping us up? 

Success isn't about big gestures - it's about the consistent care and attention to every small detail. It's not about how much wealth you can display, it's about how financially literate you can become. Don't let your anxiety about current success stop you from putting the small things in place to achieve bigger success one day. 

One of the best small things you can do is to become aware of inherent behavioural biases that impact your decision-making. The three most common mind traps are the herding, anchoring and recency biases. Herding refers to doing what the herd is doing out of fear of missing out. If all your friends are spending freely and not saving, is it wise to simply follow? Anchoring means relying too heavily on the first piece of information you stumble across. Take a more holistic approach, do your research from reputable investment sites and if you can, engage with a qualified financial advisor. Thirdly, don't get trapped by the recency bias. This is when we tend to focus more on recent events than long-term trends. Markets are currently volatile, so while some of your family and friends may have lost money over recent months, longer-term investing, with exposure to equities, creates long-term wealth despite short-term market downturns. 

Conclusion

Instant gratification is celebrated in our culture. We have information at our fingertips through Google, social media and AI, and we can instantly order transportation or food on our mobile devices. Investing on the other hand is counter-intuitive to this programming, because it requires patience. 

Materialism and compulsivity erode monthly income and trap us in debt cycles, leading to short term gain and long-term pain. I have learnt that it is better to start off small, even if that means your house or car is not as smart as that of your friends. Be wise, and utilise some of your income to provide for future capital growth over time. Your future wise self will thank you in years to come for focusing on the small things that reap meaningful long-term rewards.    

*Steven Amey, Head of Intermediated Distribution at Ashburton Investments.