Johannesburg - Letlhogonolo Modiapula, a 23-year-old geology consultant from Johannesburg, is among the 49% of Generation Z who have made it a habit to put money away each month.
For over a year, Modiapula has saved R3 000 of her monthly salary of around R20 000.
“I am very strict when it comes to putting money aside for my future. My parents understand that I need to start saving on my own. The last thing I would want is to have nothing, or to have to go to a loan shark. If my job were to end tomorrow, I would need to have money saved,” said Modiapula, adding that despite being disciplined about saving, it still had to become second nature to her.
Godfrey Mavhandu, 42, an agricultural professional, said he regretted not saving when he was younger.
“I only started saving at the age of 30, and I think it was already late. I failed to save from the first few months of getting my salary. Although I had family and other responsibilities, I could have cut down on unnecessary expenditure and saved for my future.
“When you save, you are able to purchase goods and services in cash. I view debt to be a modern-day form of slavery, because you pay high interest rates,” said Mavhandu, who revealed that his monthly home loan repayment was R10000 - half of his salary of R20 000. After paying for his monthly responsibilities and servicing debts, the married father of two is able to only put away R600 each month.
Hoping to inculcate a culture of savings in citizens from an early age, the SA Savings Institute (Sasi) has set its sights on the youth this month, Savings Month, coming up with the catchy hashtag, #crazywaytosave. Sasi said it had emerged that, among young people, 18- to 24-year-olds were the most serious about saving.
While South Africans are being encouraged to save this month, the rate of household saving has declined to 0.5% of GDP as a huge chunk of people’s disposable income is spent on servicing debt.
Gerald Mwandiambira, Sasi’s acting chief executive, said even though the #crazywaytosave campaign was primarily targeted at youth, it was aimed at everyone who received an income.
“There is no such thing as someone being underpaid. Saving is a conscious decision and a discipline,” he said.
“The only individuals who cannot save are those not getting any form of income.
“If people can get into debt, which is a choice, they can also save.”
On the other hand, Kelvin Louw, a 33-year-old visual manager, admitted to saving only intermittently, as most of his salary “takes care of domestic responsibilities”.
Louw, a married father of two, said a whopping 33% of his R15000 salary went on paying for his car and insurance for it, and he was grateful to be in a two-income household where financial responsibilities were shared.
Johan Basson, an independent financial advisor at Equity Trust in Pretoria, said the ideal monthly saving rate was 15% of one’s salary at the start of one’s career.
However, “late bloomers” still stood a chance of making substantial savings if they put aside a minimum of 20% of their net salary.
A study conducted by Budget Insurance found that South Africans who earned above R10 000 a month created budgets as a way of keeping tabs on their spending, and that the majority of professionals failed to save due to unexpected expenses and the increasing cost of food and fuel.
The study also found that the preferred way of saving for South Africans was with burial societies, followed by investment policies with financial institutions, then stokvels or rotating savings clubs.