Insights agency, Columinate, recently surveyed a representative sample of 1 000 urban South Africans to gauge their savings habits, including their preferred savings vehicles, and the results inspire optimism.
Top three reasons for saving
44% of respondents noted that they’re saving for their children’s education, 43% save for emergencies, and 42% are saving for their retirement. Sadly, only 1 in 4 respondents (25%) say that they are currently contributing to a healthcare scheme.
The data indicates that South Africans have lofty aspirations, as 34% of respondents are currently saving for a home, 32% are saving to start their own business, and 31% are saving for their next holiday.
8% of urban South Africans report that they are currently not saving at all.
SA is apprehensive about investment vehicles
68% of respondents are using the traditional bank savings account to do all their household saving – from using the account for retirement planning, emergency planning, or saving for a luxury/necessity, like a holiday or an appliance. Only 29% make use of a tax-free savings accounts, and 28% participate in their community Stokvel.
28% of respondents say that they currently have a retirement annuity, and 22% are reporting that they are members of a provident fund. Only 12% state that they own shares, with 9% investing in unit trusts, and a meagre 5% currently contributing to an endowment policy.
Not quite there yet
Many of the study’s participants are concerned about retiring, as 1 in 4 (24%) respondents report that they will not be able to maintain their current lifestyle once they retire, and 32% simply don’t know if it’s a realistic expectation. Almost 1 in 3 (30%) don’t know if they’ll be able to retire at their desired age. The concern is compounded by the 51% of respondents who reported that they haven’t started saving for their retirement.
The data indicates that South Africans are starting to realise the importance of short- to long-term financial planning, and are making an active effort to secure their financial futures. The data also suggests that there is an opportunity for investment houses to create simpler savings vehicles, or at the very least, be more clear and concise about the opportunities and benefits of existing solutions – many South Africans are strapped for cash and can’t “afford” to save more. Moreover, the financial industry’s complex approach to explaining their savings and investment products can be confusing to many South Africans, and as such, these products are actively avoided.