Over-indebtedness, insufficient retirement savings and poor financial education should jolt South Africans into action if the country is to fund its investment and growth.
Statistics tell a sobering story: currently about 2 000 houses and 6 000 cars are being repossessed monthly, the average percentage of debt to income peaked at 79,2% and there are about 80,000 judgments for debt per month.
Crispin Sonn, Director of Corporate Affairs at Old Mutual (South Africa), comments that South Africans have to make choices as a nation as we cannot live in debt and not save for tomorrow.
“We need to use the momentum around the launch of National Savings Month to inspire South Africans to save and build up their own wealth through consistent and disciplined financial behaviour,” says Sonn.
According to Sonn, poor financial habits are at the root of poor money management. Hence, the emphasis should be on changing behavioral patterns by assisting consumers to start new habits and breaking old ones - especially in an environment where more people are considerably better off today than they were 5 years ago.
“Skills and capacity building are a key element of Old Mutual’s economic transformation strategy and financial literacy is one of the areas that we have earmarked to support,” says Sonn.
Sonn adds that the savings and investment group recognises that in order to do business successfully in South Africa, we require a healthy and conducive economy – which in turn is reliant on a financially astute society.
“Saving is important for economic growth but growth is also important for saving. Therefore it is imperative that policy responses do not only focus on savings but on other drivers of growth as well,” says Sonn.
There should be a concerted and collaborative effort by business, government, labour and other interested stakeholders to mobilise and grow the nation’s savings, says Sonn.
Increasingly South Africans are introduced to the realities of spending, saving and finance at a younger age. Yet we do not have a well-coordinated and coherent financial education programme to help consumers manage their finances better.
Many young people today take jobs with salaries far higher than what their parents earned. They then begin to live a lifestyle they believe fits that income. Many realise too late that what the previous generation have is the result of assets accumulated over many years.
“Our interventions should therefore be geared towards creating a future generation of savers with solid financial behavior and a proficient understanding of personal financial issues,” Sonn concludes.