South Africans are known for being poor savers. “We believe that we do not have enough money to save,” says Witness Ntshikilana, Provincial General Manager at Metropolitan.
“While we do face a significant number of financial pressures as well as cultural expectations, such as ‘black tax’ – which add to our expenses, the most significant contributor to our poor savings rate is a lack of financial education. Thus, saving is not prioritised.
“Perhaps due to 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 dreams, the danger comes when material items and expensive experiences are purchased with money that one does not have, which creates a debt trap,” he says.
COVID’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 increased significantly; from 14.2% in the fourth quarter of 2020 to 18.0% in the first quarter of 2021.
But there is still a long way to go, according to Ntshikilana, to ensure that we have an adequate ‘financial buffer’.
He says: “As this is a hurdle we collectively face as South Africans, it makes sense that we need to harness the power of our communities and those around us to start changing our saving habits for the better.”
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,” he explains.
“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.”
He says that the advantage of these types of saving vehicles are their community-centric nature and the sense of belonging and support they offer to members.
The role of the community in your savings
Ntshikilana says that 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 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,” he says.
He suggests talking to someone in your community whom you trust and who is knowledgeable. “Approach a family member, counsellor, traditional leader or someone with financial know-how and tap into their expertise and experience.
“We need to create a culture of saving in our communities, and it starts with us.”