IMPROVING savings in South Africa is one of the major socio-economic challenges facing us as a society. Many consumers understand the need to save more, but are unsure how to go about it.

What is needed is a sustained collaborative effort to empower more consumers with financial know-how and sound financial planning. This was illustrated by the findings of the ninth Old Mutual Savings and Investment Monitor, released in July to coincide with National Savings Month. The survey is regarded as the leading indicator of the financial attitudes and behaviours of working metropolitan households.

The fact that 80 percent of respondents want to learn how to save, but 30 percent haven’t seen a financial adviser and as many as 30 percent do no budgeting is worrying. What’s more troubling is that many still don’t have a real idea of the state of their finances and only around a quarter of respondents have a retirement annuity and only 6 percent have unit trusts, mutual funds or exchange-traded funds.

Given these latest findings, it is clear that we need to intensify efforts to build a more financially astute society and address the low savings levels. The more effective our financial education initiatives, the more motivated and equipped consumers will be to make financial decisions that will improve their long-term security and well-being.

Ultimately, our efforts will drive not just the financial security of breadwinners, families and communities, but also the prosperity of the nation. Healthy economies are built largely on the savings of individuals.

According to the savings and investment monitor, working South Africans in lower income groups are reluctant to get financial advice because they believe it’s intended for higher earners. This means that the very income earners who lack confidence in their financial decision-making, and who are the most in need of guidance, are the least likely to have a relationship with a financial adviser.

Baby Boomers

As we know, lack of planning lies at the root of many financial problems. The simple truth is that financial planning counts – regardless of your income.

The monitor also found that around a third of Baby Boomers (born between 1946 and 1964), have no formal provision for their retirement and they and their families face the prospect of hardship. About 63 percent (and 70 percent in black households) believe they will in future have to support family members, and 46 percent believe their families should care for them.

These findings must be seen in the context of activating the youth and encouraging them to learn from the Baby Boomers. While the survey statistics paint a worrying picture, they also raise awareness and present good motivation for Generation X (born 1965 to 1979) and Y (born 1980 and after) to make an effort to equip themselves with financial knowledge and sound financial advice and take control of their futures.

Knowing how to manage your finances better is particularly relevant given the current economic environment, affected as it is by rising living costs, including the highest petrol price in five years. Only 9 percent of respondents say they are “living comfortably”, while confidence in making financial decisions has slipped from 7.2 out of 10 (in 2013) to 6.9 out of 10.

We have arrived at a point where financial education should be viewed with the same urgency as other types of education. Its role in enhancing the livelihoods and dignity of our citizens cannot be underestimated. Knowing better provides an opportunity to do better.

As consumers and as financial services providers, we must understand that the need for a savings culture is pivotal to economic growth. Strong national savings help to finance high levels of investment, thereby reducing the dependence on inflows of foreign capital. Sufficient savings will also enable the economy to respond nimbly to opportunities for development.

Furthermore, the national savings level has remained low compared with the savings levels of our Brics partners. To fully capitalise on the opportunities presented by emerging markets, consumers need to change their relationships with their money. So the challenge of helping people do great things with their money extends to all the players in the financial services industry. It’s a nettle we must all grasp.

Marshall Rapiya is the chief executive of Old Mutual South Africa.