Kick off a fool-proof new savings plan this festive season

Shirley Smith, Chief Operating Officer at Old Mutual Finance,

It’s a well-known fact that many South Africans are battling to get out of debt and save.

The most recent update of the Old Mutual Savings and Investment Monitor shows that only 20% of working metropolitan South Africans have any kind of formal savings, and overall financial confidence and satisfaction is steadily declining.

In fact, the number of respondents saving less than last year (41%) is the highest that it has been in the six years that the survey has been conducted.

With the festive season around the corner, the pressure and strain on breadwinners will only intensify. Shirley Smith, Chief Operating Officer at Old Mutual Finance, says this crisis has prompted South Africa’s leading financial services provider to develop the Old Mutual Money Account, a fully functional transactional account that helps you save every time you swipe.

Smith says Old Mutual aims to make it easier for consumers to save and avoid short-term debt. “We regard this as a national priority. The Savings and Investment Monitor shows that more than half of working South Africans, if faced with an unexpected expense of R10 000 or more, would be forced to take out a personal loan, rely on credit facilities or borrow from family or friends. Another 30% say they have no idea at all how they’d handle an expense like that.”
South Africa has by far the lowest savings levels of the five BRICS (Brazil, Russia, India, China and South Africa) member states, she adds. Measured as a percentage of gross domestic product (GDP), our national savings rate is just 16.5%, compared to Brazil at 18%, Russia at nearly 30%, India at more than 30% and China at more than 50%, according to National Treasury.

Key to creating a better future is developing a savings culture and increasing the nation’s savings rate. High levels of national savings strengthen the general economy, accelerate socio-economic development and enable us to capitalise on growth opportunities. Savings innovations like the Old Mutual Money Account will help address this.

Smith explains how it works:

• Money Account combines a transactional (SWIPE) account with a savings (SAVE) account.
• It offers all the benefits and flexibility of a transactional account with a debit card, as well as competitive rates earned on funds in your SAVE account.
• As the account-holder, you can set a percentage, up to 15% of your spend, that’s automatically transferred from your SWIPE account to your SAVE account each time you swipe.
• The money in your SAVE account is invested in the Old Mutual Money Market Unit Trust, but you can access it instantly if needed with no penalty charges, using the Mobile Banking App, cellphone or internet banking.
• The Old Mutual Money Account is secure, flexible and affordable: your monthly administration fee is as little as R4.50 – less than a taxi fare – and you can switch the card off and on if you need to.

Smith explains: “Let’s say you decide to save 10% and then swipe your card for R500 groceries: R500 will go to the shop to pay for the groceries and R50 will automatically go into your SAVE account. That means a total of R550 will be deducted from your SWIPE account.”

Funds in your SAVE account are invested in the Old Mutual Money Market Fund Unit Trust, which gives your money higher growth potential than a normal savings account.

Smith adds that there’s also an option for a FOCUSED SAVE discipline, where you choose to have a fixed amount automatically transferred from your SWIPE account into your SAVE account on a specific selected date. For example, if you've set your FOCUSED SAVE transfer to R200, this amount will be added to your SAVE account every month on the date you selected.

You can open an Old Mutual Money Account at your nearest branch, which you can find by going to www.moneyaccount.co.za or calling 0860 222 252.

Don’t forget to take along your ID, proof of residence and cellphone.