In the latest South African Reserve Bank (SARB) Quarterly Bulletin, the second quarter household net savings stuck for the fourth consecutive quarter on 0% of disposable income. The SARB Quarterly Bulletin report reveals a damning picture of South Africa’s extremely poor level of household savings.
Marketing and Communications Manager of Sanlam Sky Solutions, Tendani Matshisevhe, says many people believe only rich people can save but this is not true. If you don’t start saving now, you could find yourself in big financial trouble years from now, he warned.
However, Matshisevhe says a considerable number of the South Africans are faced with many obstacles to saving. Food prices are rising, fuel prices are high and electricity is expensive; all of these factors are pushing up the cost of living and decreasing what we have left to save. But he says while these expenses are very real, there’s no excuse not to save for a rainy day.
The South African Reserve Bank Quarterly Bulletin report reveals a damning picture of South Africa’s extremely poor level of household savings.
“You must start saving now and the younger you are the better. Saving should become a part of your daily activities and you should be disciplined.” He says you can find one or two luxury items that you can spend less on. “For example we buy on average R300 worth of airtime every month. Maybe we can look to buy less airtime or perhaps don’t buy alcohol for a weekend. Or maybe don’t go home every month (for those that work far away from home) but go home once every three months. In hard times like these, you must be clever about saving”, Matshisevhe urged.
He says if you earn around R3 500 a month, you could try to save around R300 and for people earning less, he recommends that they put away at least R200 a month. “Then try and put this into a bank account or saving product and leave the money there. You will then start earning the interest.”
He says everyone should speak to a financial expert who would then do a ‘financial needs analysis’ to assess your specific needs. “This will help you determine your short-term and long-term saving goals. Short-term goals may be saving towards a wedding or a car. Long-term goals would look at saving for the day you retire.” He says it’s very important to have money saved for an unforeseen event or crisis. “Put money aside now because you never know when you might need it. You might need a deposit for a house or you might need it if you become ill.”
Matshisevhe has a stern warning for both youngsters and pensioners alike. For the youth, he warns them against spending their companies’ pensions when they change jobs. “Many youngsters change jobs these days. So you work for three years for a company and belong to its pension scheme but when you change jobs, you ruthlessly spend the pension on short sighted things. If you do that, then you’ve lost three years worth of saving.” He advises that you should rather keep that money saved in a saving or retirement product. At the same time he warns pensioners not to rely on their children to take care of them. “Times are changing and we need to change the way we think. Children are moving out and not living with their parents anymore. So parents must stop seeing their children as an investment.”
Matshisevhe also warns against using credit cards because this can get you into big debt. As South Africans we spend on average 40% of our salaries paying off our debts. “We live off credit cards and then stay forever indebted to credit lenders.” He says South Africans particularly get into debts over the festive season. “People spend a lot of money over the festive season and this is short sighted. Rather put some money away so that when January comes you still have money for your basic bills, like school fees.”
As one of the country’s leading financial institutions, Sanlam is intimately involved in providing South Africans with solutions to meet their short, medium and long term saving and assurance needs. It’s also a major player in the reform of the retirement industry in association with other leading financial service companies and the national treasury. Sanlam’s own initiatives include working in conjunction with the Operation Hope organisation to teach high school learners about the basics of banking, credit, budgeting, investment and entrepreneurship.
South Africa’s saving rate is woefully short when compared to countries like China and India and as a result the country needs to be pushed up to underpin the ongoing economic growth and development. The South African Savings Institute, the Teach Children to Save campaign and a wide range of financial institutions are helping to improve the national saving outlook.