According to Deloitte’s South African Investment Management Outlook 2023, which compares South Africa’s savings rate with other countries, the country’s saving habits are far below average. This makes it more critical to drive awareness about savings amongst South Africans.
Research indicates that there is no good or bad savings personality – when it comes to savings, it’s important to understand the natural traits you are working with to set in place a strategy that matches your reality.
What are some of reasons behind the South African saving culture? The high cost of living is forcing South Africans to spend a huge portion of their money on daily living expenses and essentials, leaving little to nothing for savings. The reality is that most people are living hand to mouth and simply don’t have enough money to spend, never mind save. Factors such as living beyond your means – splurging on items you know you can’t afford in the hope that you’ll somehow make it through the month – and lack of financial knowledge to assist consumers navigate their financial space are drivers of the poor savings culture in our country.
Mapalo Makhu at Women & Finance believes that financial services providers and advisers have a vital responsibility to promote a savings culture through collaborative advise and financial education efforts. “Providing a service that combines financial advice and education is critical. Part of the challenge faced by South Africans is the misconception that advice is only for wealthy consumers, and we need to dispel this myth as everyone can access advice,” said Mapalo Makhu.
Inspired by the way South Africans rally together when times are tough, Metropolitan last year hit the streets of South Africa to explore saving habits and wisdom from the people of South Africa. “Through Metropolitan Sisonke in Savings campaign last year, we learned that South Africans are giving each other more realistic advice that takes stock of people’s realities. We still believe that the findings from our campaign still stand true. The one thing that is evident is that people from all walks of life benefit from advice. In addition to sharing tips on realistic ways of savings, it is equally important to work with a financial adviser to assist with a roadmap towards your financial goals,” continued Mapalo Makhu.
‘’By walking the journey together, we are able to craft financial plans that reflect the lifetime goals and aspirations of consumers and, most importantly, set out the steps needed to take to get there. This shared journey also enables an effective educational engagement between advisers and customer and, ultimately, the community at large.
“The lack of financial understanding we face in this country is not because of a lack of available information,” said Mapalo Makhu, “it is because of a lack of relevance, understanding and engagement. We need to relook how we view savings and get our institutions and advisers to meet consumers where they are,” concluded Mapalo Makhu.