In South Africa, it is not uncommon for one breadwinner to support as many as 10 family members, and often this is done with general lack of knowledge about the importance of retirement savings and managing credit, as there is an abiding belief that someone else will provide support as they age.
Government, economic experts, financial journalists and representatives from the investment, tax and labour sectors all agree that South Africans are simply not saving enough. But what about South Africans, is the importance of savings resonating with them? Our recent money management survey reveals that indeed South Africans are largely aware of the need for careful money management. They understand the importance of budgeting and saving, and are prepared to cut back on spending should they be met with an unforeseen loss of income. Overall we found a general positive sentiment toward money management:
- 70% of South Africans are planning to either save ‘the same or more’ over the coming six months (slightly lowered than the previous year’s results, but overall still positive)
- 88% believe ‘they should regularly save a portion of their monthly income’
- 72% or just over two-thirds, agree that it is prudent to have between three and six months’ cash savings in case of emergency
- 47% or just under half, are planning to save ‘the same or more’ said ‘retirement’ is their top reason for saving, a 10% increase compared to the preceding six months, followed by ‘investments’ at 35%
Now while we are encouraged to see South Africans inclined to take on better financial planning, at the same time, our complex savings market also leads to people opting to keep small amounts of cash out of the formal banking system. This issue requires on-going attention from the government and private sector in the form of tax incentives, limiting access to harmful credit and financial education programmes for both children and adults.
It is nonetheless encouraging to see that a significant number of South Africans are taking notice of current economic conditions, and this overall positive notion proves now is the time to promote mindfulness when it comes to money management, and encouraging a habit of saving.