South Africa very poor at saving money

South Africa has one of the lowest savings rates in the world, measuring at a dismal 0.5%.

When it comes to saving, South Africans have a bad track record, hence the need for National Savings Month – dedicated to creating awareness around the importance of saving.

According to Deloitte’s South African Investment Management Outlook 2023, which compares South Africa’s savings rate with other countries, the country’s saving habits are far below average.

Emerging market peers Brazil and India boast savings rates of 16.9% and 10.8%, respectively – South Africa is clearly lagging far behind.

Duma Mxenge, Business Development Manager at Satrix says, “National Savings Month is important to help drive more awareness around saving and investing among South Africans.”

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Mxenge says it’s important for individuals to know their investment ‘personality’ so they can come up with investment strategies that are suited for their traits.

Satrix provides a quiz to help people find their investment ‘personality’ by answering a set of questions about their spending habits and investment preferences.

“There is no good or bad personality when it comes to investing. It’s just about working with your natural traits to set in place a strategy that matches who you are,” Mxenge says.  

FNB customers have the formula

While the rest of South Africa still needs to step up their savings game, FNB customers seem to have it all figured out.

The First National Bank recently announced that its customers have saved over R6.6 billion in the last four years – all from saving small amounts between R2 and R50.

FNB attributes this remarkable achievement to its innovative Bank Your Change feature, which enables users to automatically save a percentage of their change to a separate bank account each time they use their FNB debit card for purchases.

FNB Cash Investments CEO, Himal Parboo, says the feature has been instrumental in helping customers save effortlessly, and build financial buffers for emergencies and unforeseen circumstances.

“The success we continue to see with this automated approach to saving also demonstrates the power of allowing consumers more control over the way they manage their money,” says Parboo.

Factors affecting saving habits

Although saving habits may be an individual choice, there are a number of factors at play. These include:

• High cost of living: forcing South Africans to spend all their income on daily living expenses and essentials, leaving nothing left to save.

• Low income: Living from hand to mouth. Simply not having enough money to spend and save.

• Living beyond your means: Knowing you can’t really afford to splurge on that brand new car or gadget but proceeding to buy it anyway with the hopes that you’ll somehow make it through the month.

• Lack of financial knowledge/literacy: Not knowing what saving and investment options are available. So, do some research or consult a financial advisor to help you navigate your way in the financial space.

• Debt: Your credit card might be doing you a disservice. That instant gratification of a simple swipe may be the reason you’re constantly in debt. So, perhaps you could try saving up for that shopping spree next time.

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Saving for a rainy day might seem like a draining financial exercise, but it’s worth the effort.

Having a financial buffer provides peace of mind during periods of high inflation and rising interest rate, by giving you guaranteed financial security when you need it most.