fbpx

Growing up, my parents always told me about saving money. Without revealing my age, R5 when I was in school could get me two packets of small chips, sweet iceblock, and bubblegum. My dad gave me R5 as pocket money, and he always told me to save at least R2 from the R5 – as a child, this seemed impossible to do because there was no way I was going to cut off any of the junk I bought. 

Fast-forward to being a young adult and having a job, I now see the importance of saving money. I have acquired some knowledge about saving money, and since July is savings month, walk this journey with me, as I expand my knowledge about how crucial saving is.

This is the first part of our savings month series, and I caught up with Gerald Mwandiambira acting CEO and Chief Strategist for the South African Savings Institute (SASI). 

My biggest concern was whether we should be speaking about saving during a pandemic where people are losing jobs, and incomes getting cut. ”We should be talking about saving especially because everyone has learnt their lessons from the pandemic about either saving or not saving. This is a great time to talk about it because everyone has either positive lessons or negative ones,” says Mwandiambira. 

Generally, saving money in South Africa was improving until COVID 19 hit our shores. Mwandiambira says the numbers were not good but we were moving in the right direction. “To put it into perspective, South Africans spent three-quarters of their salary servicing debt. You can imagine that if they were servicing debt that much, it means not a lot was being saved. However, those who were saving, COVID 19 forced them to utilize those savings, and this set them back”, explained Mwandiambira. 

According to Mwandiambira, we all need to save at least 10 – 15% of our income, and that’s not happening. We have got one of the best banking systems in the world, and I asked him if banks are just failing in encouraging saving. ”It is a double-edged sword, and the business of a bank is to lend money. Banks make money when they lend it. However, do they have better solutions for saving? Yes, could they offer better interest rates? Yes, but their focus very much remains on advancing credit, which is problematic because it leaves most of our country indebted”, he adds.

While there aren’t actual statistics around who saves more between men and women in South Africa, women tend to have more compelling reasons to save. By nature, women are more nurturing and inclined to save. Mwandiambira elaborates, ”women work fewer years than men, remember when a woman has a child, she takes maternity leave and sometimes the income is reduced. This reduces the number of years she’s in the workspace or earning a full salary. Secondly, women have a longer life expectancy – this also encourages them to save more. And many women are single parents, and this encourages women to save in case they end up in that situation.”

As we ended off our conversation, Mwandiambira gave the following tips for young women who want to start saving;

Top 3 Tips To Encourage Your Saving
  1. Consult a financial advisor
  2. Avoid pressures of black tax
  3. Know what your credit score looks like

Next week we will be unpacking barriers to saving and the psychology of saving.