Over 66% of South African households are unable to save even though most of them are earning over R20 000 a month.
This is according to an online survey conducted in July by research company ADNA to coincide with Savings Month. The study polled more than 8 000 adults with incomes ranging from less than R10 000 a month to more than R50 000.
One-third of us save, but two-thirds don’t
The researchers found that only 33.5% of respondents say that they are saving at the moment, which means that around two-thirds are unable to do so.
This is despite 81.5% of those who responded saying that their household income is above R20 000 and over 80% of them work full-time or part-time.
Of those who are saving, 46.9% of them save between 6-10% of their household income.
Only a tiny percentage – about 4% of households – report that they save above 30% of their income.
Why do South Africans choose to save?
The most popular motivation to save is for retirement, with 23.6% of respondents choosing that reason. The next most important purpose is to buy a home (16.9% of respondents) and then saving to pay for their children’s education (13.5%).
When it comes to the way that people invest their money, 28.2% of respondents choose fixed deposit as their preferred way of saving. This is followed by savings accounts (23%) and cash savings (14.4%).
Wisely, most people said they liked to ensure that the money they save is not in one place and they prefer saving vehicles that are safe and not too risky.
“This could indicate the lack of confidence people have in the economic climate and investment potential,” the ADNA researchers said. “It is also interesting to note is that 1.5% of the people surveyed use cryptocurrencies to invest their money,” they added.
Reasons that we don’t save our money
Why are South Africans not saving? In many instances it comes down to economic reality and not an extravagant lifestyle of parties, entertainment and consumer goods.
According to the study, the key reason cited by 37.8% of respondents is that their salary is too low to cover all of their expenses.
A further 31.8% say that they have to support their extended family, so do not have enough to save at the end of the month.
A positive sign is that, of those who are not saving now, almost 45% of them are hoping they will be able to save soon.
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Author: Mike Simpson