South Africans are adopting better financial habits and saving, but their savings aren’t catering for long term goals, research revealed.
According to the Old Mutual Savings and Investment Monitor which tracks financial attitudes and behaviour of SA’s working metro population, those surveyed said that they put 14% of their income towards saving, compared to 15% recorded in 2017.
“However, we need more action to see this translate into results… the reality is that their formal savings do not seem to cater for longer term goals, such as education, life, death or disability cover, or retirement,” said Lynette Nicholson, research manager at Old Mutual.
More respondents are starting to set financial goals, an improvement from 69% in 2016 to 76% in 2018. More are planning their finances for five to 10 years ahead and feel optimistic that things will get better in the next six months, said Nicholson.
But only 43%, down from 46% in 2016, of those surveyed are saving for their children’s education. Lower income households show the sharpest decline in this regard, down from 29% in 2016 to 18%.
The research shows that one out three individuals born before 1965 do not have formal provision for retirement.
Of the respondents 61%, up from 53% recorded in 2017, save using stokvels, however the average contributions are declining especially among higher income households.
The research also showed that respondents in all income categories are less likely to be able to cope with a financial emergency.
The increasing cost of living is also affecting households with 67% spent on living expenses, up from 62% in 2017.
“There seems to be an awareness of the need to cut back more on expenses such as DStv, food and groceries,” the report read. This cost cutting is more prevalent in upper income groups.
About 41% of respondents said finances are a source of stress in their homes.
Nicholson said that South Africans need to commit to responsible financial habits and improve their financial understanding.