The FINANCIAL — 70% of South Africans are planning to either save ‘the same or more’ over the coming six months, according to MasterCard Survey of Consumer Purchasing Priorities. This is a decrease from the 92% who said the same thing in the previous survey, according to MasterCard.
Some 83% of the same consumers confirmed that they were uncertain about the economy and consequently were for saving for ‘precautionary measures’, which is an increase of 16% from the previous survey.
Just under half (47%) of the survey respondents who are planning to save ‘the same or more’ said ‘retirement’ is their top reason for saving, a 10% increase compared to the preceding six months, followed by ‘investments’ at 35%.
“The low savings rate in South Africa is widely reported,” says Philip Panaino, division president, MasterCard, South Africa, “and as such, while a decrease in saving is not ideal, given the current economic landscape it is nonetheless encouraging to see that a significant number of South Africans are taking notice of local and global financial conditions, and that saving priorities lie in future planning,” he added.
When asked how much of their total monthly income they’re planning on saving over the next six months, the majority (45%) of respondents said between 1% and 10% of their total monthly income. Eighteen percent said they plan on saving between 11% and 20% of their income, which is closer to the industry-recommended savings rate for retirement, while just 7% plan to save between 21% and 30%, the survey shows.
Half of respondents feel they can retire with enough financial support between the ages of 51 and 60, followed by 43% who said between the ages of 61 and 70. Interestingly, 5% believe they can retire before the age of 50. The average age of comfortable retirement was reported as 62, up two years from last year’s average of 60 years.
Responding to statements on financial planning, the vast majority (88%) of respondents believe that ‘it is never too early to have a financial plan’. Conversely, just 20% of respondents believe that financial planning is ‘only for the rich’.
“The survey indicates that South Africans are inclined to financial planning. This is a positive base from which to promote mindfulness and caution when it comes to managing money, and encouraging a habit of saving,” said Panaino.
Survey respondents were asked about the items they would cut back on in the event of a loss of household income. Dining out, entertainment and purchasing gifts were at the top of their lists, while 10% said they would cut back on their regular savings.
Conversely, when questioned about how they would spend a cash windfall; respondents replied that adding to their savings was a top priority, ahead of taking an overseas trip or domestic holiday, paying off debt or spending on home renovations, according to MasterCard.
South Africans responded well to statements gauging basic money management, with 88% believing ‘they should regularly save a portion of their monthly income’ and the same percentage agreeing that they have the ‘ability and understanding to budget day to day finances’. Just over two-thirds (72%) agree that it is prudent to have between three and six months’ cash savings in case of emergency, while 69% claim to keep track of their spending on a weekly/monthly basis.
“Overall, the research results reveal that South Africans are largely aware of the need for careful money management,” Panaino says. “They understand the importance of budgeting and saving, and are prepared to cut back on spending should they be met with an unforeseen loss of income. This suggests that many consumers are still actively taking part in their financial planning and that they are committed to setting funds aside to look after their financial futures,” he concludes.
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