When it comes to South Africans in general and saving money, the one thing we hear far too often is that they do not save enough. One of the most worrying statistics that gets touted around is that as little as 6% of the working population will be able to afford to keep up their standards of living when they retire. But what is to do done?
The answer is that people must develop the savings habit. But in order for this savings habit to be able to stave off a reduction in living standards in retirement, men and women must start saving as early as possible.
The truth of the matter is that when you are young retirement seems to be far, far away. But if you can start saving in your twenties, the chances of having an enjoyable and affordable retirement will be much higher.
Social grants will not end poverty
Developing a savings habit is beneficial in general. It’s not just your retirement you should be thinking of, but your current standard of living right now. But for so many, saving is the last thing on their minds. They struggle to survive from day to day.
The fact of the matter is that the number of people living below the poverty line here in South Africa is around 49.2%, most of which are part of the 6.8 million unemployed.
Yes, there are social grants, but they can only go so far. The cash is some assistance to the neediest, but it don’t go anywhere near far enough in terms of lifting recipients out of the poverty trap. Unless people can earn a liveable wage that not only allows them to exist but gives then sufficient to be able to set money aside in savings, the problem is not going to go away.
Social aid is not some kind of quick fix and never will be. Perhaps the South African government would be better off by giving those living in poverty access to opportunities not just in terms of employment, but in terms of education and healthcare too.
Giving people the opportunity to earn a decent wage is only the beginning. They must also be taught to understand the benefits of saving. July is national savings month here in South Africa. What better time to start?
Avoiding frivolous spending
The worst sin when it comes to money management, is spending money frivolously. Unexpected bills and expenses lie just around the corner. If you have nothing set aside to pay these costs, you will be in trouble.
Using credit cards and taking out loans should be last resorts. They can help you over difficult times, but only if you know in advance that you can afford the repayments. Developing a saving habit is by far your best bet.