JOHANNESBURG – At least once a year, as many as 41 percent of South African households do not make it, financially, to month end. Many others barely make it, and too few are saving for the future.
Lizl Budhram from Old Mutual Personal Finance says data from the 2018 Old Mutual Savings and Investment Monitor shows that living from pay-cheque to pay-cheque is an unhealthy cycle that requires immediate redress.
“Historically, many households had to make ends meet in a low-income environment that made saving or investing money virtually impossible,” Budhram explains. Compounding the problem has been the fact that many people were denied access to formal financial services, including basic financial education, and other saving and investment tools.
Budhram said that this contributed to a financial culture that normalised spending all monthly earnings. “We do as we see, and not as we’re told,” she adds, pointing to a survey conducted by the National Foundation of Credit Counseling in America, which found that the majority of respondents learnt most of what they know about personal finance from their parents.
“Children pick up money habits from what they see in their homes,” she says. “People who grew up in households where there was responsible financial behaviour are positively influenced and more likely to be responsible with money.”