July has been designated ‘Savings Month’ by the Savings Institute of South Africa. This year the focus is firmly placed on engaging our country’s youth with a theme of “#crazywaystosave.”
At the launch of the July Savings Month 2019 campaign last week, SASI Chair Prem Govender pointed out that there is an urgent need to equip young people with the savings know-how that can directly impact their earning power, wealth creation abilities and happiness. “South Africa’s household saving rate has declined to -0.5% of GDP, while our household debt as a percentage of disposable income is currently 71.9% – meaning that for every rand earned, nearly three quarters is spent on debt”, she emphasised.
Govender further highlighted low levels of financial literacy as a reason behind South Africa’s low savings rate and growing credit addiction. “The young tend to save less and spend more. With 20 million people aged between 15 and 34, South Africa has a young population that are increasingly relying on credit. We can blame issues such as black tax, high unemployment, a rising tax burden and inflation – but we also must fundamentally stop living beyond our means and drive a savings culture to break the cycle of inter-generational debt.”
The #crazywaystosave campaign
The South African Savings Institute (SASI), with support from Absa and the IDC, will use July Savings Month 2019 to focus on driving awareness around how savings relates directly to happiness, as well as encouraging the development of vital entrepreneurial abilities that will allow young people to create business opportunities to sustain their financial independence.
According to Thami Cele, Head of Savings and Investments at Absa Retail and Business Banking, the ‘Crazy Ways to Save’ idea was born out of a need to engage the youth and approach savings differently to get better results. Cele highlighted ABSA Happiness Index research which has identified a direct correlation between savings and the levels of consumer happiness. “We have been studying the underlying factors that ‘make us save’ and the impact that saving can have on overall well-being and happiness.”
The ABSA research found that top factors that improve South Africans’ overall happiness include:
- 92% – having confidence that my family is provided for
- 92% – the ability to afford the necessities in life
- 92% – leading a healthy life
- 91% – saving for the future
“Simply stated, being financially prepared for the future, staying in control of their savings and being satisfied that their families are well provided for are the key drivers to happiness,” says Cele. “Ultimately, 45% of South Africans who are currently saving are significantly happier than their counterparts, whilst 71% of South Africans who claim to have 4 or more months’ salary saved are happier than their counterparts.”
“Saving when you’re already under financial pressure can often seem like an impossible task. While you may come up with many crazy ways to save money, from making your own laundry soap to stocking up on condiments at the fast food store to literally freezing your credit cards – the fundamental truth of compound interest is that money makes money and it’s vital to have a short, medium and long-term plan, to be educated about the tools you can use and to put your savings to work to ensure your financial stability and happiness”, Gerald Mwandiambira, SASI acting CEO, also mentioned.
Mwandiambira also recently mentioned that this year SASI will be aligning with the Financial Sector Conduct Authority’s (FSCA) Consumer Education Department (CED) which rolled out a Youth Financial Campaign in June. Workshops will be hosted at roadshows in Gauteng, the Eastern Cape and Mpumalanga to grow awareness on financial management and encourage better financial decision-making amongst our youth.
Although the emphasis is on the youth and savings this month, saving should be an attitude instilled in all. What role will you be playing in Savings Month?
Click here to download SASI’s “Saving step by step – advice from SASI experts and partners” – a good read for both you and your client.
The insurance industry plays a very important role in all four factors identified in the ABSA “happiness” survey. This is evidenced by the vast amount of savings reflected in ASISA’s regular updates, whether it is savings, or the massive amounts paid out under life and disability claims every year. Unfortunately there is still a huge imbalance in terms of the various income strata. This is where the challenge for all of us in the industry lies; to spread the happiness to all. Offering tax free investments or endowments to people who pay no tax is just one of many failures from the past which we need to address to regain the confidence of customers