OPINION: We need to break our bad saving habits

South Africans do not save

We are told that there is a poor savings culture in our country. How many times have you not heard this phrase?

It has become the clarion call for all manner of financial advice these days. Especially in the wake of the increasing pressure on consumers and households. The calls have been getting louder. The pandemic showed the government how poor our savings levels are, and it costs when it comes to social interventions to mitigate humanitarian crises.

The calls have been getting louder

I have also had numerous conversations on this topic with financial advisors, and economists saying we must learn how to, and start saving. We must learn how to plan and budget. We must seek financial advice.

I have seen this matter being discussed from a retirement point of view too. We are told our poor savings misses the power of compound saving and, ‘time in the market’. Shameer Cothia from Momentum explains how the Two Pot system will work when it gets introduced next March. Its is designed to leverage ‘time in the market’ and will benefit younger consumers. He also pointed out why he feels this is a good intervention to boost savings.

Laura Du Preez from Smart About Money also spokes to us about this new system, that will ensure we do have capital when we retire. Furthermore, there is access to a portion of the funds – admittedly with criteria.

FNB conducted a survey highlighting how difficult it is to save with consumers resigning to not stop working – owing to poor retirement outcomes.

It’s a risk

I heard something different from Wonga’s Brett van Aswegan recently. He joined me to explain the dangers of borrowing money, and when lenders increase one’s credit to reduce monthly payments. He explained this is a new debt trap – that unfortunately – many are signing into. Brett cautioned how this can impact our finances. He then mentioned something no one has shared in our discussions on debt, loans and savings…saving is a privilege.

That strikes me as being a contradiction in terms. For so long, consumers were battered by the fact that they are poor savers. We must prepare for the unexpected. It is our fault we are not saving.

If saving is a privilege, why is it ‘impossible’ to save? If it is a privilege, should we approach advancing savings differently? Does it once again point to inequality? Does this support calls for a basic income grant? I do understand how comforting silver bullets are, but they unfortunately do not exist.

The complexity and inter-connectedness of what so many are calling polycrises, implies we need to be innovative. Add in some courage and compassion when designing our interventions. The Two Pot system does help, and is productive.

To further accelerate savings and to build a savings culture, South Africa’s inequality is possibly the biggest threat to that. Our Government has a key role to play, and needs to show more imagination in their problem-solving (Whether this current government will be able to do so is for the electorate to decide).

Crafting financial products and savings initiatives within this context may be helpful and more compassionate. Blaming consumers for not saving – I doubt – will improve savings.