Why the financial playbook of previous generations no longer works for young South Africans

34% of Clarity users are between the ages of 18 and 35

With Savings Month placing financial wellbeing in the spotlight, industry experts are encouraging South Africans to rethink the role of savings and embrace investing as a critical tool for securing a long-term financial future.

For generations, the formula to financial success has been straightforward and centred around disciplined saving: earn an income, spend less than you make, cut unnecessary expenses and consistently put money aside. While this remains sound advice, today’s economic environment looks very different from the one previous generations experienced, exposing an uncomfortable reality – saving alone may no longer be enough to achieve long-term goals such as retirement, buying a home, funding education or achieving broader financial independence.

“This challenge is particularly evident amongst younger generations,” says Tinus Rautenbach, Business Head of Clarity by Investec. “Millennials and Gen Z professionals are entering adulthood in an environment where everyday living costs, inflation and financial responsibilities have increased significantly quicker than incomes, making it harder to keep up with saving.”

The numbers reflect this challenge. South Africa's household savings rate remains negative, with the household savings ratio sitting at approximately -1.4% at the end of 2025. This means many households are spending more than they earn and are unable to build meaningful financial buffers. At the same time, retirement readiness remains alarmingly low, with research showing that only 6% of South Africans are on track to retire comfortably.

“These realities call for a necessary shift in how people think about growing their money,” says Rautenbach. "Saving remains one of the most important financial habits anyone can develop. It creates discipline, provides a safety net against unexpected expenses and helps navigate periods of uncertainty – which often show up unannounced."

"However, in today's economic environment, the reality is that long-term financial progress requires more than simply putting money aside. As economic conditions evolve, more South Africans are recognising the importance of allowing their money to participate in long-term growth opportunities."

Rautenbach explains that while saving is designed to preserve capital and provide liquidity, investing offers the potential for long-term growth that can help individuals keep up with inflation and work towards their financial goals.

"Many people still believe that if they save consistently, financial progress will naturally follow. Saving is essential, but investing can play an important role in helping people build towards future goals by giving their money the opportunity to grow over time."

This growing awareness is driving increased interest in investing, and technology is helping drive this shift and the access. In the past, investing was often viewed as complicated, intimidating or reserved for a select group of experienced investors. Today, digital investment platforms, educational resources, lower barriers to entry and transparency are making it easier for more South Africans to start their investment journeys.

This increased accessibility is resonating strongly with younger generations who are seeking practical ways to take control of their financial futures. Compared to around 15% of youth aged 18 – 29 who were actively engaged in investing about 10 years ago worldwide, Clarity’s data shows that approximately 34% of its users are between the ages of 18 and 35 – highlighting the growing participation of younger people who are actively embracing investing as part of their financial strategy.

Rather than viewing investing as something reserved for later in life, many are recognising the value of starting earlier and benefiting from the power of long-term growth. Clarity is also seeing strong interest in diversified investment options such as ETFs, as well as global investment opportunities. The appeal of digital investing platforms lies not only in accessibility, but also in the ability to learn and build confidence along the way.

"The conversation shouldn't be about choosing between saving and investing," says Rautenbach. "The strongest financial strategies typically include both. Savings help cover emergencies and short-term expenses, while investing supports longer-term goals."

Major milestones such as buying a home, funding education or retiring comfortably often require more than disciplined budgeting and saving alone. Importantly, investing is not about chasing trends or taking unnecessary risks. It is about adapting a deliberate and informed approach to building finances over time and understanding how investing complements saving within a broader financial plan.

"Saving will always play an essential role in financial wellbeing," concludes Rautenbach. "By combining disciplined saving with thoughtful investing, South Africans can position themselves more effectively to achieve their long-term financial goals and build greater financial resilience over time."