The South African Savings Institute (SASI), with support from Absa and the IDC, launched July Savings Month 2019 recently, with discussions sparking a national conversation on how everyone can find ways to save.
Facilitated by financial journalist Arabile Gumede, the breakfast featured leading voices in personal finance personal including finance coach Mapalo Makhu from Women and Finance; award-winning personal finance journalist Maya Fisher-French; Samke Mhlongo from TNC Wealth Partners; Nicollette Mashile from Financial Fitness Bunny and SASI acting CEO and My Money author Gerald Mwandiambira to provide tangible savings insights.
SASI Chairperson Prem Govender says, “There is an urgent need to equip young people with the savings know-how that can directly impact their earning power, wealth creation abilities and happiness. South Africa’s household saving rate has declined to -0.5% of GDP, while our household debt as a percentage of disposable income is currently 71.9% – meaning that for every rand earned, nearly three quarters is spent on debt.”
Govender cites low levels of financial literacy as a reason behind South Africa’s low savings rate and growing credit addiction. “The young tend to save less and spend more. With 20 million people aged between 15 and 34, South Africa has a young population that are increasingly relying on credit. We can blame issues such as black tax, high unemployment, a rising tax burden and inflation – but we also must fundamentally stop living beyond our means and drive a savings culture to break the cycle of inter-generational debt.”
According to Thami Cele, Head of Saving and Investments for Everyday Banking at Absa Retail and Business Banking, the ‘Crazy Ways to Save’ idea was born out of a need to engage the youth and approach savings differently to get better results. Cele highlighted ABSA Happiness Index research which has identified a direct correlation between savings and the levels of consumer happiness. “We have been studying the underlying factors that ‘make us save’ and the impact that saving can have on overall well-being and happiness.”
The ABSA research found that top factors that improve South Africans’ overall happiness include:
- 92% – having confidence that my family is provided for
- 92% – the ability to afford the necessities in life
- 92% – leading a healthy life
- 91% – saving for the future
“Simply stated, being financially prepared for the future, staying in control of their savings and being satisfied that their families are well provided for are the key drivers to happiness,” says Cele. “Ultimately, 45% of South Africans who are currently saving are significantly happier than their counterparts, whilst 71% of South Africans who claim to have 4 or more months’ salary saved are happier than their counterparts.”
Gerald Mwandiambira, SASI acting CEO, says, “Saving when you’re already under financial pressure can often seem like an impossible task. While you may come up with many crazy ways to save money, from making your own laundry soap to stocking up on condiments at the fast-food store to literally freezing your credit cards – the fundamental truth of compound interest is that money makes money and it’s vital to have a short, medium and long-term plan, to be educated about the tools you can use and to put your savings to work to ensure your financial stability and happiness.”
According to Mwandiambira, saving is not necessarily dependent on income; it is largely dependent on willpower and discipline. “Hiccups in your commitment to saving, if you don’t plan this out carefully, will lead to a feeling of failure. Talking to a financial adviser early to help simplify the complexities around saving and investing will help you to plan your financial future while pointing out any gaps in your plan.”
Mwandiambira concludes that it’s important for South Africans to move away from negativity around our savings rate and look towards developing innovative savings alternatives and reinforcing positive savings behaviour – which the Happiness Index shows leads to a happier nation. “Cultivating a culture of savings and promoting alternative savings solutions in all spheres remains the focus of SASI and our dedicated partners. Savings Month has been designed to remind consumers to strive towards financial freedom and move away from remaining continuously vulnerable. Let’s find the #crazywaystosave!”
