Only 46 percent of people who work in South Africa’s major metropolitan areas have a personal budget and even fewer say they have a household budget, according to the latest Old Mutual Savings & Investment Monitor.

Without a budget, it’s hard to know and control your financial situation, Derick Ferreira, the head of product management at Old Mutual, says. The first step towards financial security is to draw up a budget as part of a broader financial plan.

Ferreira explains that the financial planning process helps you to identify your personal financial goals and better understand how to achieve them.

“The theme and objective of the Old Mutual Savings & Investment Monitor is ‘Know better, do better’ and it applies equally to us, as financial services providers, and our customers. We believe knowledge and insights are powerful guides,” he says.

Ferreira stresses the critical importance of having a handle on your finances and the need for financial literacy at individual and household level. The monitor, which was launched in 2009, is an annual survey that tracks the financial attitudes and behaviours of South Africa’s working metropolitan population. It serves as a barometer of sorts and is one of Old Mutual’s contributions to the national conversation about saving and investing. “It’s about helping you understand the value of proper financial planning,” he says.

If we know where we are going wrong, we have a better chance of correcting ourselves. But if we are in the dark about our situation or our habits, we have no hope of fixing them.

A key finding of this year’s survey is that nearly half of all South African households are saving less than they were a year ago. This is the lowest savings level reported since 2009, when households were recovering from the 2008 global financial crisis.

The collective savings of a country’s citizens play a role in bolstering the national economy through the financing of infrastructure investment, Rian le Roux, an economist at Old Mutual Investment Group, says.

“Since 2000, total gross savings in the South African economy has remained broadly unchanged, at approximately 16 percent, which is way too low to finance investment of around 20 percent of GDP, leaving the country heavily reliant on foreign capital inflows to finance the shortfall.”

In other words, if foreigners do not invest in South Africa, investment in infrastructure, such as roads, bridges, hospitals and ports, will decrease, undermining the already weak growth potential of the economy, he says.

Some of the negative knock-on effects of a weak economic growth rate include businesses and investors looking for opportunities to invest abroad; increased pressure on the country’s unemployment rate; and escalating levels of socio-economic unrest, Le Roux says. “Low savings lead to low growth, which leads to even less saving – thereby creating an ongoing vicious cycle.”

Turning to personal savings, Le Roux says households have been “dissaving” for more than a decade. “In simple terms, this means that, on average, people spend more than they earn, and finance the shortfall by borrowing or depleting their savings. Most households are not accumulating enough of a financial nest egg to finance future liabilities, such as children’s education and retirement.”

Contributing to the low savings levels is the fact that people don’t realise how much they will need in retirement and therefore don’t plan sufficiently.

“Saving more is a conscious decision that requires spending less today,” Le Roux says.

Ferreira says if you are serious about spending less, review your budget to identify areas where you can cut back. For those who don’t have a budget, his message is harsh: take responsibility. Whatever is stopping you from budgeting – whether it’s laziness, complacency or fear of facing the truth – you need to overcome it, he says. Budgeting is essential in a “plastic” world that enables you to swipe a debit or credit card whenever you want to buy anything. You can easily lose track of your spending. Unlike in the days of cash, when money was tangible and as you spent it, you watched it disappear.

He concedes that there are those who earn so little that they can’t afford to save. But there are those who can afford to save a little and those who can afford to save more than they do. However this is not going to happen unless you make it happen, he says echoing Le Roux’s sentiments.

The survey shows that low-income earners tend to be weak planners, more focused on the now, and weak savers because of their financial reality rather than a lack of will. Wealthier respondents are better at setting goals and planning, and are better savers. More low-income earners than high earners said they would like financial advice, but consider it hard to find someone they trust. However, over 80 percent of all respondents say they would like to learn how to save.

This is where a good financial adviser can add value, Ferreira says. “The best advisers will have an advice-led, customer-centric approach, which means they offer holistic financial solutions based on their customers’ unique needs and aspirations.”

He says the perception that you need to be wealthy to be able to afford to see a financial adviser is not true and is a barrier for the people who most need advice. “Never think that you earn too little to be eligible for advice,” he says. “An adviser should help you understand your circumstances and your needs.” And if you haven’t shared your goals with your adviser, you need to, because your goals reveal and help determine your priorities.

“But most importantly, have an honest conversation with yourself,” Ferreira says. “We are quick to blame others or external factors for the situation in which we find ourselves. Ultimately it’s up to you to take responsibility for your financial situation; only you can change your behaviour.”

HOW TO DEVELOP A MONEY-WISE MINDSET

A person who has made it a priority to save is someone who plans ahead, knows their weaknesses and is cost-conscious, Derick Ferreira, the head of product management at Old Mutual, says.

* Plan ahead. A person with a planning mindset goes shopping with a list that’s based on a meal plan. That way, you plan to eat in, rather than eat out and you avoid buying last-minute take-aways for dinner and wasteful expenditure from buying without a meal plan in mind, he says. “Buy what you need and only what you need. Be disciplined when you shop and committed to your budget. Don’t spend more than you have allocated to spend.”

* Know your weaknesses. If you enjoy indulging your children, or find it hard to say no to them, don’t take them shopping with you. And if you enjoy indulging yourself, don’t shop on an empty stomach, he says. “Or you might be a sucker for a special deal like those ‘buy-three-get-one-free’. It may well be a saving to buy in bulk, but only if you can afford it. Remember, you need only one, not three.” It may seem trivial, but the point is that all those little specials and treats for yourself or your children add up – and you could be allocating that money towards an investment to fund your children’s education or your retirement.

* Be cost-conscious. Check your bank statements and tally up all your costs and charges. Consider if you could be on a more cost-effective account. Check all your debit orders to make sure they are all legit. If you have both a landline and a cellphone, consider if you need both. When you become due for an upgrade on your cellphone, consider forgoing the upgrade if it means buying another top-of-the-range phone. Consider what you could save by not incurring that expense.