The South African Savings Institute (SASI) launches its annual Festive Season Savings Campaign in a year where the South African Rand has depreciated significantly against major currencies; interest rates have risen after being at their lowest in 30 years with more rate increases expected in 2016 ; a major student protest under #FEESMUSTFALL has prevented a rise in university fees; the country’s economy is fragile and most South Africans remain highly indebted.
SASI Chairperson Prem Govender says “We are continuing to develop a robust culture of saving in South Africa and our successful first SASI July Savings Month Convention in Soweto with a theme discussing Black Tax and the Sandwich Generation demonstrated this. SASI will continue to raise financial education and savings levels to the top of our national agenda as savings is a significant national objective. In fact, it is the pressures which the sandwich generation face, that gave rise to the fees must fall campaign.”
The Institute, together with the Provincial Offices of Consumer Protection and the Financial Planning Institute, will spend the month long campaign conducting consumer education workshops in key strategic areas and provinces around the country. The institute will also visit various shopping malls as part of this year’s Festive Seasons campaign.
The Consumer Financial Vulnerability Index indicates that the pressure on consumers’ cash flow has remained consistently high throughout 2015. It is clear that most consumers have reached their affordability limits on even basic necessities and debt remains a major challenge for individuals and families alike. “The debt to disposable income ratio in South Africa has remained high at 77.8% whilst the national savings rate fell,” says Govender. “South Africans continue to spend more than they earn in an environment of growing inflation and rising interest rates. This will be tested by the festive period where many people have become accustomed to overspending. Our message this year is to promote responsible spending ahead of 2016.”
The Festive Season is a time when families get together and the nation celebrates another year whilst taking a deserved holiday break. SASI Acting CEO Gerald Mwandiambira says, “The festive period is the opportune time for families to consider forming Savings Clubs and Stokvels. As well as spending wisely over this period, it should also be a time to proactively plan for savings in the new year. The Old Mutual Savings and Investment monitor of July 2015 shows that a growing number of savings groups are seeking alternative financial resources.”
The Old Mutual Savings and Investment Monitor 2015 July showed a rise in Stokvel participation ,from 45% to 58%, as an informal savings vehicle. SASI believes that the National Credit Amendment Act which stringently assesses affordability on new credit applications to curb irresponsible lending will lead to higher loan application rejections. This will make stokvels even more attractive as micro lenders in 2016.
Mwandiambira further recommends considering giving the gift of saving. Tax Free Savings Accounts (TFSA’s), launched by National Treasury, are offered by all major financial institutions and present an opportunity to save this festive period. Gerald Mwandiambira adds, “ TFSA’s make an ideal gift at this time of giving. One can open an account for a family member or purchase a cash voucher to allow the recipient to open such an account at most supermarkets. This is a gift that can empower and get a person you love to start saving for their future.”
In other initiatives, SASI will use the #TIMETOSAVE to share ideas on savings, investment and individual testimonies, encouraging people to ask questions which others can answer. “We feel that besides highlighting past money mistakes, all South Africans must now consider ways in which we can all positively contribute to developing our national saving, as individuals. We hope that our partners and supporters in financial education, retailers, banks, insurance companies, and all South Africans will promote this hash tag with us,”says Mwandiambira.
Tips to survive the festive season
- Resist SALE, think SAVE! Clearly distinguish between needs and wants.
- Make your own Christmas gifts and only take holidays you can afford.
- Have a clear budget for your requirements in the New Year. Create a budget using the SASI budget tool.
- Use free online tools to track your spending and debt and know where every cent of your income goes.
- Pay cash for all purposes and don’t be trapped by easy credit – in fact, cut up those store credit cards!
- Visualise what you want to save for and start saving more. Save your bonus and make it multiply.
- Service your debt and stick to the payment terms. If you cannot service your monthly debts discuss your situation with your credit providers before it is too late. Consumers can seek assistance from a registered debt counsellor by contacting the NCR on 0860 627 627.
Since SASI July Savings Month 2015 Nedbank has provided free budgeting tools and information to all South Africans, regardless of where they bank, on www.myfinanciallife.co.za. SASI also offers information on savings on www.savingsinstitute.co.za