There is no escaping the fact that South Africans are bad savers. Consider our savings and investments rates in comparison to other emerging economies such as Brazil, Russia, India and China (BRIC). According to the World Economic Forum, savings in China are at 51% and India is at 32% while South Africa lags considerably behind at just 16.5%.
Statistics like these speak volumes about our ability to save. If we as a nation want to learn how to save more then the question that should be on everyone’s lips is why we find it so difficult to squirrel away funds for the proverbial rainy day? Here are a few answers:
- South Africans need improved access to financial literacy education so that they can understand why they need to save and how they can save - i.e. what savings plans are available to them and how they work etc.
- Credit is so freely available that people don’t have to save. But remember that if you can’t afford to save, then it is unlikely that you can afford to borrow!
- From the petrol attendant who earns a weekly wage to high-income engineers, everyone is battling to stretch their budgets as the cost of living continues to increase. This means there is little, if any, money available for saving.
- The common perception that “when I am old, my children will take care of me”. This has led to the “sandwich generation” – those people who are faced with providing financially for their children as well as their parents. The likelihood of the sandwich generation being able to save what they need to for their own retirement is very low.
There are a number of reasons why saving money is so important. You need an emergency fund to deal with the likelihood of retrenchment and other unexpected expenses. You have to think about your children’s education and of course a retirement plan to take care of your old age. If you are just starting out in life you need to think about saving towards your first car or a deposit on you first house or apartment. And, irrespective of your age, you have to save so that you never have to resort to high-interest credit to solve a financial crisis.
Are you one of the many South Africans finding it difficult to save money every month? Here are a few articles that might help you, plus you can follow us on Facebook for daily financial tips and savings advice.