There is a crisis about which the country is in denial to address.
In spite of frequent warnings from experts for South Africans to curb their spendthrift tendencies, more South Africans are committing their overstretched financial resources to servicing debt than saving for the rainy day. So says a financial planning expert, Cathy Lammas, in her article “State of savings in South Africa”.
Comparatively, unlike its BRICS peers – China and India in particular – South Africa has the pathetically low level of saving. This is not surprising that majority of people wait for government to provide them with funding so that they can start small businesses.
Lammas laments the situation in South Africa: “Conspicuous consumption is rife, with many people spending (and creating debt) to acquire goods as a visible sign of their status, which can either be invidious or pecuniary. Neither form of spending is healthy; both represent acquisition of goods where the monetary value far exceeds the utility of the purchase.”
But the situation is not beyond redemption, she contends.
“Culture can be changed, but a holistic approach is required, calling on individuals, organisations and the state to step up.
“Starting at grass roots level, a return to piggy banks would instil a culture of saving at a very early age. Individuals need to take responsibility for their finances and enlist the aid of a professional financial adviser, who can tailor a portfolio and financial plan, specific to their needs and circumstances.”
More to the point, she believes, corporate South Africa has a powerful role to play. Increasingly, employees have expressed the desire for managers to intervene and provide guidance with personal financial matters and more specific information regarding suitable financial products. “Companies could consider in-house training in financial matters for their personnel, or even appointing a full-time financial adviser as an extension of their HR services.”
On its part, Lammas adds, Government needs to resolutely continue with its plan to prevent employees from encashing their savings when they change employment. Sadly, South Africa is one of very few countries that allows this (encashing their savings). “The average South African changes employment at least seven times during their working years and often reaches retirement with not enough accumulated savings.”Share this article on Social Networks