Christmas – A Time To Save

Adv Kate Thambiran (Director) @ Lucid Living

“We want to remind consumers to put money away, because it is a long gap between the December and January pay checks. And therein lies the misery,” said Prem Govender of the South African Savings Institute (SASI) – speaking at the launch of its ‘Spend Wisely’ campaign this festive season.

Numerous studies have shown that not only are South Africans not saving, but they are getting deeper into debt, Govender said.

Almost half of active credit users in SA have impaired records, meaning they are either three months in arrears or have an adverse listing on the credit bureau, reflecting a judgment against them or an administration order, according to statistics from the National Credit Regulator (NCR).

Kim Royds, the managing executive in charge of collections at Absa Retail, says piling more debt during this festive season on an already stressed personal balance sheet is the fastest route to bankruptcy.
She warns consumers against using bonuses to indulge in unnecessary spending. Ms Royds says “the best gift that you can give to yourself is to invest a large portion of your annual bonus or any spare cash you may have towards easing your debt“.

The panel acknowledged that the vast majority of South Africans are too poor to save for retirement, but even the three million consumers who are in the financial position to save don’t do enough.

SA has one of the lowest savings rates in emerging economies, says SASI, which blames the instant gratification mentality of consumers and their reluctance to save.

SA’s gross savings rate has averaged 15% over the past 10 years against more than 30% in some developing markets such as China.

The best way to save money is to prioritise your expenses, plan a budget and stick to it, they said. Other suggestions included making Christmas gifts instead of buying them and thinking “save” when you see a sign that says “sale”.

The panel encouraged consumers to think of creative and cost-effective gifts for Christmas. They leaned toward a saving, rather than a spending theme, over the festive period.

Ms Govender says there is concern about the trend by consumers to become “short-sighted” about their finances during the period, when they should be thinking about saving for essentials such as repaying debts or school fees.

“While we acknowledge the spirit of giving that is so characteristic of Christmas, responsible spending … is the healthy option for any household,” Ms Govender says.