South Africa has long been accused of having a poor savings culture cultures and a habit to spend more than they earn which leaves people vulnerable to a future that is becoming increasingly volatile and uncertain. The Covid-19 pandemic and lockdown exacerbated the difficulty of poor savers, many of whom were unprepared for the realities of having their income partially and fully impacted. Research by Ipsos recently revealed that as many as 60% of South Africans are having to dip into their savings in order to meet their monthly expenses. Those with a savings cushion to rely on, however, have found it much easier to get through this uncertain period.
If nothing else, the impact of the pandemic is a stark reminder of the importance of putting money aside for unexpected and unplanned expenses. A recent digitised Sowetan Dialogue event, in partnership with Nedbank shared expert advice on saving for the future with practical tips on how consumers should change their spending – and saving – habits so that they are more financially secure in the future.
More than 80% of South Africans have seen their incomes impacted due to the economic downturn revealed Sisandile Cikido, Head of Retail Investments at Nedbank. It was an unprecedented event which continues to highlight just how important it is to have an emergency fund in place.
No matter how little or how much you earn, it’s important to put money aside for rainy days, she urged. No matter how little you save, be disciplined about putting a certain amount of your monthly income into a savings fund where you can’t easily access it for everyday spending. Cikido also encourages consumers on making saving easy for themselves. She explained that setting up a recurring payment into your investment account by using the Nedbank’s Money App for example, is a form of a disciplined method of saving.
Where possible, try and pay a little extra on your debt, even good debt like your bond. For instance, allocating just 10% of your income for bond repayments has the potential to cut years off your bond repayments, she pointed out.
Conceding that money can be a sensitive topic, she said a financial advisor is a good idea to ensure your savings and investments are optimally structured and to provide honest feedback. “When it comes to savings it’s important to be disciplined, deliberate and practical,” said Cikido. “I call it being naked with your finances.”
Financial planning starts with a plan and having savings goals, agreed John Manyike, convenor of the ASISA Consumer Financial Education Standing Committee.
Lyndwill Clarke, head of department for consumer education at the Financial Sector Conduct Authority, advised getting financially educated and having a good understanding of your unique financial situation: what your income is minus all your monthly expenses, debt and liabilities.
Defining your long term financial goals involves figuring out how much money you need to retire and then saving accordingly for that, revealed Angelique Arde, a personal finance journalist.
It is very important to not measure a person’s wealth by what you see, such as the car they drive urged financial journalist, Laura du Preez. Her advice was to try not to owe the bank any interest.
Win your share of R5 million when you open and invest – or re-invest – R100 000 in a Nedbank electronic fixed deposit account. The promotional period runs from November to the end January 2021. Terms and conditions do apply. For more information go to www.Nedbank.co.za