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Tapping into your community can change your saving habits for the better

Photo: Freepik

Photo: Freepik

Published Oct 15, 2021


By Witness Ntshikilana

South Africans are known for being poor savers. Trading Economics, which provides economic indicators and data, projects that in 2022, the South African household saving ratio – which refers to the income saved by household during a certain period of time – will sit at only 0.60 percent.

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Why are South Africans not good at saving? South Africans believe that they do not have enough money to save.

While we do face a significant number of financial pressures as well as cultural expectations, such as “black tax” – which add to our expenses, I believe that the biggest contributor to our poor savings rate is a lack of financial education, which means that saving is not prioritised.

Perhaps as a result of our difficult past, many South Africans believe that it is important to be seen as leading an aspirational lifestyle. While it is important to have financial goals and dreams, the danger comes when material items and expensive experiences are purchased with money that one does not have, which creates a debt trap.

Covid-19’s saving silver lining

Yet it appears that the Covid-19 pandemic may have an unexpected silver lining, in making South Africans more aware of the importance of saving. According to statistics from the South African Reserve Bank (SARB), South Africa’s national savings rate – which is gross domestic product (GDP) that is saved rather than spent in an economy – increased significantly: from 14.2 percent in the fourth quarter of 2020, to 18.0 percent in the first quarter of 2021.

But there is still a long way to go to ensure that we have an adequate financial buffer should we find ourselves facing a future crisis or unforeseen event.

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As this is a hurdle we collectively face as South Africans, it makes sense that we need to harness the power of the collective – our communities and those around us – to start changing our saving habits for the better.

Community saving

Stokvels and burial societies are popular informal savings vehicles within South African communities. Stokvels allow you to leverage the power of collective saving, with members contributing fixed sums of money either weekly or monthly for a specific purpose, such as groceries or debt repayment. The group then decides how and when the money is distributed.

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These are generally a good option for short to medium term financial goals, such as food or entertainment for family visiting over the festive season, for example. Burial societies are based on a similar model, except that the pay-out is made in the event of death.

The advantage of these types of saving vehicles are their community-centric nature, and the sense of belonging and support they offer to members. If you decided to get fit, it is easier to commit to exercising if you have a friend joining you for a run. Stokvels work similarly – by being part of a group dynamic, it helps keep you accountable to the group’s saving targets.

The role of the community in your personal savings

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While community savings pools are ideal for shorter term needs, you shouldn’t neglect your personal financial goals, which will allow you to build wealth over time. This is where formal savings vehicles, such as savings accounts or plans, come into play.

While these plans are typically engaged by you, as an individual, it is still possible to leverage the power of your community to determine which option is best for you, and to help motivate you to save. “There are those in your life who are willing to guide you in getting to where you want to be,” he says.

Approach a family member, counsellor, traditional leader or someone with financial know-how, such as financial adviser, and tap into their expertise and experience.

Those within your community can help you make the best choice based on your own personal goals and individual circumstances, as there are many savings options out there.

Regardless of whichever option you choose, it is important to take that first step and start saving – as well as encourage those around us to do the same. We need to create a culture of saving in our communities, and it starts with us.

If we can improve our financial health while encouraging those around us to save, our community will thrive – and ultimately, so will our country.

Witness Ntshikilana is Provincial General Manager at Metropolitan.


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