Mention the word "savings" to the average South African and you will get a wide range of responses, but rarely will people admit to saving too much or having over-saved.
The reality is that households have been hit with rising costs of necessities that leave little leeway for luxuries such as saving.
There is little doubt that saving is important for the average South African, but all too often the high cost of living frustrates even the most frugal of consumers.
News headlines continue to overwhelm us with the struggling global economy, unabated consumer spending and the rise of lenders such as African Bank, Capitec, FinBond and Real People on the back of unsecured loans.
Just this past week ratings agency Moody's warned that unsecured loans of more than three years had increased to more than 60% of all loans from less than 30% prior to the financial crisis.
Add South Africa's rising unemployment rate to these gloomy figures and the need to save becomes an even more pressing discipline for households.
According to a recent study by Mastercard on consumer purchasing priorities, 70% of South Africans are planning to either save the same or more over the coming six months, which is down sharply from 92% in the previous survey six months ago.
The extent of consumer unease can be measured in the 83% of respondents who said they were uncertain about the economy and consequently saving for "precautionary measures". The number of people saving for retirement, however, has climbed by 10% over the previous survey.
Initiatives such as National Savings Month aim to engender a greater sense of responsibility of saving by households, but such efforts invariably are left behind in the day-to-day survival mode that many face.
Saving money requires a harsh discipline
Allon Raiz, chief executive of Raizcorp, a small business development organisation says: "On a psychological level, saving is a proxy for thinking about the future and delayed gratification and it requires the discipline of planning."
Raiz was named the Young Global Leader by the World Economic Forum and rewarded with the Oliver Empowerment Award for Entrepreneur of the Year earlier this year. He is largely concerned with the discipline of saving by entrepreneurs.
"For entrepreneurs, saving is a luxury in the early years. During this time, small businesses are cash flow starved and every cent is utilised.
"Because of this, entrepreneurs must be on guard against developing the bad habit of not saving when cash is indeed available," he cautions.
"Having an amount set aside in a savings account helps entrepreneurs develop a sense of financial security and strength. This feeling of strength then enables them to make better decisions around the opportunities that present themselves."
He advises that the best way to actually achieve this is to take a certain amount of money every six months and deposit it into some form of savings account — and then forget about it.
In theory that is a fantastic approach, although not always feasible for small businesses fighting to stay alive.
Raiz admits to saving roughly 10% of his monthly income. His motivation is driven by his entrepreneurial mindset, saying that "as an entrepreneur, I don't think about retirement. I think of savings more as a buffer for a rainy day".
The saving patterns of two ordinary South Africans, who are possibly unfairly biased toward saving because of their positions as junior economists with the Reserve Bank, is not that different from other respondents in the survey.
Both, who asked not to be named, manage to save 15% to 20% of their monthly income and recognise the importance of maintaining this discipline.
"I think it's very important to try and create a savings culture. It's important to save money for a day that you might need it and to save up to buy things instead of buying on credit," says the one.
The other respondent says: "It encourages people to become less indebted and restrict yourself to live within your means and in the same way have something in times of need."
Their primary reasons for saving include house renovations, building up a deposit for a car, down payment on a bond, as well as holidays, special occasions, emergencies and retirement.
Fear of a gloomy future
Other respondents showed the same attitude as that of the young economists. For example, Tebogo Mohalanyane, a 20-something personal assistant at a small property development firm says that while she hasn't heard of National Savings Month she is aware of the need to save and tries to do just that.
"We need to grow up with this awareness, not only when you start your work life. It has to be a lifestyle that you are used to," she says. Her main reasons for saving are for rainy days, holidays and retirement.
Kwanele Funde, an IT systems co-ordinator at one of the country's largest mining companies, says he is also unaware of National Savings Month and although he does manage to squirrel away funds every month, he is not impressed with saving incentives or the banks themselves.
"There is no value whatsoever [in creating awareness of July as savings month] because they do not provide a lucrative mechanism of attracting savings. If people get peanuts for investing, do you think they will be encouraged to save? And in my experience the bank has more respect for people in debt than for those who live debt-free," he says.
Despite his scepticism, he saves about 10% of his income of which a small proportion is used for wealth creation and the larger portion pumped into his home loan as additional contributions.
Any annual bonuses are used for family holidays and the like. Funde has no store cards and only one credit card. In fact, store and credit card ownership is surprisingly low among respondents, averaging at roughly one for each.
Brian Holmes, who runs a media consultancy, restricts his largesse to a single credit card. This is partly because he believes that squandering hard-earned money on the interest associated with such credit is counter-productive.
"Savings would result in lower debt levels, which would mean fewer rands spent on interest that could put people in a stronger financial situation in the long term," he says.
His roughly 10% monthly savings are less targeted than Funde's approach and far more in line with Raiz's entrepreneur's view. Holmes says his motivation for saving is fear of the unknown.
A procurement manager at a multinational FMCG business, who asked not to be named, says that the idea of retrenchments places individuals under tremendous pressure.
"A lot of people are unaware of the amount of money they earn and most importantly the amount of money they are wasting on a regular basis. Considering the recession, it becomes even more important to think about tomorrow and about the long term. I am concerned about whether people have been saving and will be able to go five to six months without gainful employment," he says.
"My wife and I target five percent of our combined incomes [to save every month]. Some months we hit target, others we miss. We have policies for retirement and retrenchment."
His reasons for saving are closely aligned with other young households who are concerned about the future prosperity of their families.
"Our savings are because we are both really paranoid about other things.
"What happens if we can't afford to send our son to the school we'd like? So we save out of paranoia. There is no 'real' goal," he says.
While efforts have been made by the National Treasury to introduce new incentives for individuals to save, the reality is that the combined pressures of a stagnant economy, potential job losses and rising prices keep consumers firmly on the back foot.
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