Savings tips for National Savings Month
The South African Savings Institute (Sasi) has launched National Savings Month, an campaign to be held annually in July to encourage South Africans to increase their savings “as a path to personal freedom,” Sasi said.
Speaking at the campaign launch event in Sandton on Wednesday, Sasi Chairperson Prem Govender revealed a number of startling facts about the attitudes South Africans have towards saving.
Govender revealed that:
• Much South Africans battle to manage their finances, something that leads them to rely on the State or a neighbour to bail them out.
• Reliance on others for one’s financial well-being has led many South Africans to play a passive role in our nation’s growth.
• The World Economic Forums’ 2011/12 Global Competitiveness Report ranks South Africa 72nd in the world for its gross national savings rate, putting it far behind its BRICS peers like China (2nd), India (15th) and Russia (44th). Brazil ranks at the 90th spot.
• In Africa, 13 countries have higher gross national savings rates than South Africa including 3rd placed Algeria, Morocco (25th), Nigeria (27th), and neighbours Zambia (32nd), Namibia (34th), Botswana (42nd) and Lesotho (62nd).
• The current domestic economic situation with slow growth and inflation at the top of its band, has exposed South Africans’ vulnerabilities in terms of their income, expenditure, savings and debt servicing.
• In recent years as a country our gross domestic savings have fluctuated between 14% and 16%, while household savings have been between 2.7% (1991) and -0.2% (2012:Q1) of their disposable income, with debt servicing hitting as high as 81% (2008).
• South Africa had a poor score on Visa’s 2012 International Financial Literacy Barometer which ranked it 25th out of 28 countries.
• South Africa is also the third worst of all the countries surveyed when it comes to speaking to its children about money, doing so on an average of just 16.6 days a year.
Govender said that what is not commonly understood is that savings are the primary vehicle for resource mobilisation and that nations that save enjoy a certain degree of self-reliance, excellent economic growth and citizen well-being.
“We need to remind South Africans that the power is in their hands to either strive for financial freedom by saving or to remain vulnerable to personal and family crises, or the effects of the economic downturn,” she said.
Sasi compiled a list of savings tips to help you get by:
• Live economically.
Don’t buy things you don’t need and don’t try to keep up with friends and neighbours. Everybody’s needs are different. Live according to yours.
• Saving is a mind-set.
Save water, electricity and money. Don’t waste anything of value – recycle, pass on old clothes, swap children’s toys with other parents instead of buying new ones, and convert things you don’t use any longer into money by selling them.
• Teach your children to save from an early age.
They need to know about the household budget. Set them to work for their pocket money. Help them learn that making a financial decision is about weighing the value of one thing against another and choosing which one to forego in favour of the other.
• Look after the things you have.
Take pride in what you have worked hard for. Respect your own efforts and feel good about what you have achieved.
• Don’t make excuses about why you don’t save.
Saying, “I am too young” or “I’ll save next month” or “Only rich people can save”, won’t get you anywhere.
• Save consistently.
Start saving consistently and seriously for your retirement years from the day you get your first job! Learn the magic of compound interest. Put aside at least 15% of your income every month in a safe investment.
• Use credit sparingly and carefully.
It’s cheaper and more rewarding to wait until you have saved funds for yourself. It’s better to spend money you have earned than spend money you still have to make.
• Pay debt as fast as you can.
Cut up your credit card and store card if you need to. And remember, cuts in the interest rate should be used to settle debt first, not to take on more debt.
• Shop around before you buy.
Compare prices and benefits. Question the value of each purchase as you make it… “will it build my assets”, “is it just to show-off”, “is it cheaper else-where?”. Don’t ever be afraid to ask questions when you want to know more.
• Learn to resist those tempting media messages.