Shaken by the coronavirus, consumers will be hesitant to spend – and harder to convince

Apr 22 2020 05:01  Londiwe Buthelezi FIN24

After more than a month cooped up in their houses, and with many people worried about their financial stability after the lockdown ends, companies should expect consumers to be more selective about how they part with their money than they used to be, marketing consultancy form M&C Saatchi said on Tuesday.

During a webcast addressing how companies should prepare themselves for the lifting of the lockdown in nine days’ time – if no extension is announced – Robert Grace, head of strategy M&C Saatchi SA, said consumers’ spending will likely be fueled by the “release” need initially, prompting those who have money to spare to seek experiences like getting that restaurant meal they’ve been forbidden for a while.

South Africa’s economy is gradually opening up, but it is not yet clear whether restaurants will be open in nine days’ time – even if lockdown ‘officially’ ends. So far it’s few industries, including mining and call centres, that resumed limited operations last week, in line with the Amended State of National Disaster Regulations Extended Lockdown gazetted on 16 April.

Looking at the severe acute respiratory syndrome-related coronavirus (SARS) that broke out in China in 2003 and spread to 26 other countries, when the travel restrictions associated with it were lifted, fast food outlets turnover surged 29%, while “pleasure retail”, which includes expenditure on pampering oneself, recorded a 35% jump in turnover, M&C Saatchi’s intelligence unit found.

“We are predicting a confidence rebound. When we looked back at previous pandemics or crisis, we’ve seen that,” said Grace, adding that the latest data from China is indicating a similar behaviour is happening with the current strain of coronavirus (Covid-19).

But because the South African economy was already on its knees when it confronted the outbreak, having slipped into a technical recession in the fourth quarter of 2019, and given the looming global recession, this rush to spend post-lockdown will likely dampen.

“We are going to enter recessionary times and whilst there will be less disposable income, but people’s needs and desires will still be there,” said Grace.

He said in the case of Swine Flu, this spending fuelled by a “sense of release” lasted for about three months. But the consulting firm said people are inclined to spend their limited rands on symbolic items – like visiting only places with sentimental value to them – going forward. While this does not mean no one will buy luxuries or that companies in that space are doomed, it does mean that they may need to work harder to convince buyers. Companies that saw the opportunity to reassert their care for customers during these tough times, such as Discovery Medical Scheme which was the first to open up free online doctor consultation to the rest of the country, will benefit, said Grace.

Financial services companies, in general, might come out as beneficiaries of this uncertain time as the consumerism trend starts to reverse. More people have started realising as their sources of incomes dried up during the lockdown that they need to build more financial buffers for themselves, said Diana Springer, partner and head of strategy for one of M&C Saatchi’s units.

“Consumers are seeking experiences and products right that give them a sense of security and stability. I would like to hope that there is a greater sense of the need to save because all of us have suddenly thought we wish we had more to fall back on,” she said.

Mike Schussler, owner of Economists.co.za, said while people’s sense of financial security has been threatened and many will probably save more in the short-term, but that might not last either.

“We’ve seen crises before that prompted people to save a bit more, then two to three years down the line it has sort of gone back to normal,” he said.

Data from Trading Economics show that South Africa households’ saving ratio moved to a positive terrain, clocking around 0% in 2010 after the 2008-2009 global recession. Prior to that, local households were dissaving – or spending more than they earn – with their saving ratio hovering around -2%. However, a year later, in 2011 the ratio dipped below 0% again.

 

 

 

Can South Africans save for a rainy day?

Article commissioned by BreadCrumbs Linguistics — a Behavioural Linguistics firm specialising in nudge-based communication www.thebreadcrumbs.co.za.

Speaking to journalists at Tuynhuys in Cape Town, President Cyril Ramaphosa was quoted in a News24 article as saying, “South Africa isn’t a country of savers. Our pension funds are effectively the only pots of money left”. Two days later, on the 5th of March, the National Institute for Communicable Diseases (NICD) announced to the nation that the first positive case of COVID-19 in the country had been reported and confirmed.

Fast forward to the 15th of March, with the number of confirmed positive cases having risen to 61, President Ramaphosa declared a national state of disaster. Giving a clear signal of the gravity the COVID-19 virus posed to public health. To mitigate its exponential spread, government would embark on mass communications focusing on good hygiene and effective prevention methods. To this end, he said, “in essence, we are calling for a change of behavior amongst South Africans”. In this prepared speech declaring a national state of disaster, the President acknowledged that beyond the public health impact, the COVID-19 pandemic would have a potentially disastrous effect on the country’s economy. In order to minimise this, he said they would later announce, “…comprehensive package of interventions to mitigate the expected impact of COVID-19 on our economy…which will consist of various fiscal and other measures…”.

For context, consider this: for the past five years, key metrics of the economy which have dominated popular discourse have been the low growth rates and budget deficits, which both imply a low national savings rate. Now, as the country grapples with the economic fallout from this global pandemic, the truth is that South Africa’s fiscal policy space is extremely limited. This will be further exacerbated by the constraints of high cost of debt service following Moody’s recent downgrade of the country’s credit rating to sub-investment grade with a negative outlook.

Amongst many other fundamental flaws that the COVID-19 pandemic has revealed about the structure of the South African economy and its impact on society, it has exposed and magnified the issue of not saving for a rainy day both on a household and on a national level.

When this pandemic passes, as it surely will, we should not return to business as usual with regards to the saving habits of South Africans. To enable the country and its people to save, some of the changes will have to be structural (requiring definitive reforms) but others can be immediate. Here I am referring to behavioral changes which can be affected as soon as July, traditionally the month dedicated to savings in South Africa. Just as the President called for change of behavior amongst all South Africans in the interest of public health, he can do the same in the interest of the financial wellbeing of South Africans with the help of behavioral science practitioners in crafting effective messages that will resonate with our population.

In 2015, Tax-Free Savings Accounts (TFSAs) were introduced. Since the inception, the South African government through national treasury has been trying to encourage individual savings, but, despite this effort, uptake of TFSAs has remained stubbornly low. As a savings and investment vehicle there is consensus amongst financial advisors that TFSAs were an appropriate policy response by Treasury to increase individual savings and investments. Furthermore, personal finance bloggers have written extensively on the benefits of this product. Notwithstanding these facts, a great product and accompanying information on its benefits, uptake of TFSAs has been slow. This can be explained by behavioral biases. A good example of this is present bias which is the tendency to focus on the now, or the current self, to the detriment of the later, or future self. This adverse behavior can be treated by nudging people towards better saving decisions, for example by using short-term incentives/rewards which are more tangible.

Nudge theory is a branch of economics designed to get us to do the right thing by making it easier and more beneficial. It is, therefore, perhaps time that Treasury in collaboration with the South African Savings Institute (SASI), explore the use of nudges. This suggestion is not unprecedented, as nudge theory is already broadly utilised by governments elsewhere, who aim to change social norms or instill better habits. The theory gained traction in 2008, at the time of the publication of the book Nudge by US-based academics Richard Thaler and Cass Sunstein.

Post the COVID-19 crisis, the world will undoubtedly adopt a new way of living and in this new period it will be important for South Africans to adopt nudging at scale to fix the stubborn old problem of a poor savings culture.

WRITTEN BY

Tariro Mudzamiri

CRAZY WAYS TO SAVE

July is Savings Month in South Africa and this year, the focus is firmly placed on engaging the youth with the theme, #crazywaystosave.

The South African Savings Institute (Sasi), with support from Absa and the Industrial Development Corporation, launched July Savings Month at The Maslow Hotel, Sandton on 26 June, with discussions sparking a national conversation on how everyone can find ways to save.

The discussion was facilitated by financial journalist Arabile Gumede and featured leading voices in personal finance including finance coach, Mapalo Makhu from Women and Finance; award-winning personal finance journalist Maya Fisher-French; Samke Mhlongo from Chief Executive of The Next Chapter (TNC) Wealth Partners; Nicollette Mashile from Financial Fitness Bunny and Sasi acting CEO and My Money author, Gerald Mwandiambira, to provide tangible savings insights.

Sasi Chairperson, Prem Govender and Sasi director Basil Maseko. Photo: Itumeleng Komana

Sasi chairperson, Prem Govender first gave statics that opened the floor for discussion,” South Africa’s household saving rate has declined to -0.5 per cent of the Gross Domestic Product, while our household debt as a percentage of disposable income is currently 71.9 per cent, meaning that for every rand earned, nearly three quarters is spent on debt.” Govender continued to say that there was an urgent need to equip young people with the savings know-how that can directly impact their earning power, wealth creation abilities and happiness.

Makhu jumped right in and gave her “crazy ways to save” suggestions that left the audience astonished.

“How many of you here use the same water to bathe your children or attend events like these just to get free food?” she asked. “As crazy as this sounds these are starting points that if used strategically, could save you some coins.”

Mapalo Makhu from Women and Finance gives her crazy ways to save suggestions. Photo: Itumeleng Komana

Makhu advised the youth to also beware of spending on big brands just to look good on social media but Mhlongo suggested otherwise, “I will unashamedly, wear my Gucci and Louis Vuitton,” said Mhlongo. “The trick is knowing when you should spend and how you actually use social media.” Mhlongo did say that she gets paid to post some of her pictures wearing a certain brand because she has mastered the art of using social media to her advantage. “This is actually another crazy way to save, use social media, target brands and make money.”

According to Mwandiambira, saving is not necessarily dependent on income; it is largely dependent on willpower and discipline.

“Hiccups in your commitment to saving, if you don’t plan this out carefully, will lead to a feeling of failure. Talking to a financial adviser early to help simplify the complexities around saving and investing will help you to plan your financial future while pointing out any gaps in your plan.

Samke Mhlongo from TNC Wealth Partners and Nicollette Mashile from Finacial Fitness Bunny were part of the panel discussion. Photo: Itumeleng Komana

Mwandiambira concluded that it is important for South Africans to move away from negativity around our savings rate and look towards developing innovative savings alternatives and reinforcing positive savings behaviour, which the Happiness Index shows leads to a happier nation.

Thato Mmmapale and Msizi Mbatha are ready to save crazy this July. Photo: Itumeleng Komana

“Cultivating a culture of savings and promoting alternative savings solutions in all spheres remains the focus of Sasi and our dedicated partners. Savings Month has been designed to remind consumers to strive towards financial freedom and move away from remaining continuously vulnerable. Let’s find the #crazywaystosave!”

Finding #crazywaystosave can make you happier this July Savings Month

July is Savings Month in South Africa, and this year the focus is going to be firmly placed on engaging our country’s youth with a theme of “#crazywaystosave.” The South African Savings Institute (SASI), with support from Absa and the IDC, launched July Savings Month 2019 today, with discussions sparking a national conversation on how everyone can find ways to save.

Facilitated by financial journalist Arabile Gumede, the breakfast featured leading voices in personal finance personal including finance coach Mapalo Makhu from Women and Finance; award-winning personal finance journalist Maya Fisher-French; Samke Mhlongo from TNC Wealth Partners; Nicollette Mashile from Financial Fitness Bunny and SASI acting CEO and My Money author Gerald Mwandiambira to provide tangible savings insights.

SASI Chairperson Prem Govender says, “There is an urgent need to equip young people with the savings know-how that can directly impact their earning power, wealth creation abilities and happiness. South Africa’s household saving rate has declined to -0.5% of GDP, while our household debt as a percentage of disposable income is currently 71.9% – meaning that for every rand earned, nearly three quarters is spent on debt.”

Govender cites low levels of financial literacy as a reason behind South Africa’s low savings rate and growing credit addiction. “The young tend to save less and spend more. With 20 million people aged between 15 and 34, South Africa has a young population that are increasingly relying on credit. We can blame issues such as black tax, high unemployment, a rising tax burden and inflation – but we also must fundamentally stop living beyond our means and drive a savings culture to break the cycle of inter-generational debt.”

According to Thami Cele, Head of Savings and Investments at Absa Retail and Business Banking, the ‘Crazy Ways to Save’ idea was born out of a need to engage the youth and approach savings differently to get better results. Cele highlighted ABSA Happiness Index research which has identified a direct correlation between savings and the levels of consumer happiness. “We have been studying the underlying factors that ‘make us save’ and the impact that saving can have on overall well-being and happiness.”

The ABSA research found that top factors that improve South Africans’ overall happiness include:
• 92% – having confidence that my family is provided for
• 92% – the ability to afford the necessities in life
• 92% – leading a healthy life
• 91% – saving for the future

“Simply stated, being financially prepared for the future, staying in control of their savings and being satisfied that their families are well provided for are the key drivers to happiness,” says Cele. “Ultimately, 45% of South Africans who are currently saving are significantly happier than their counterparts, whilst 71% of South Africans who claim to have 4 or more months’ salary saved are happier than their counterparts.”

Gerald Mwandiambira, SASI acting CEO, says, “Saving when you’re already under financial pressure can often seem like an impossible task. While you may come up with many crazy ways to save money, from making your own laundry soap to stocking up on condiments at the fastfood store to literally freezing your credit cards – the fundamental truth of compound interest is that money makes money and it’s vital to have a short, medium and long-term plan, to be educated about the tools you can use and to put your savings to work to ensure your financial stability and happiness.”

According to Mwandiambira, saving is not necessarily dependent on income; it is largely dependent on willpower and discipline. “Hiccups in your commitment to saving, if you don’t plan this out carefully, will lead to a feeling of failure. Talking to a financial adviser early to help simplify the complexities around saving and investing will help you to plan your financial future while pointing out any gaps in your plan.”

Mwandiambira concludes that it’s important for South Africans to move away from negativity around our savings rate and look towards developing innovative savings alternatives and reinforcing positive savings behaviour – which the Happiness Index shows leads to a happier nation. “Cultivating a culture of savings and promoting alternative savings solutions in all spheres remains the focus of SASI and our dedicated partners. Savings Month has been designed to remind consumers to strive towards financial freedom and move away from remaining continuously vulnerable. Let’s find the #crazywaystosave!”

(ENDS)

Saving step by step – advice from SASI experts and partners

Step one: Set clear financial goals.
You need to plan your short-term goals (less than five years) where saving money is more important than growing it. This can be settling debt and putting an emergency fund in place or saving for an overseas holiday. Your medium-term goals (five to ten years) require you to balance the security of your money with growing its returns. This may include making provision for your children’s education or buying a car. Your long-term goals (more than ten years) are where the returns on the money you have accumulated count most – here we’re talking retirement planning or settling your homeloan.

Step two: Track your spending and create a realistic budget
You must have a very clear picture of how much money you earn, what you spend it on and how much can be saved. It also helps you cut expenses. Part of this budget exercise is to face the harsh reality of the dent debt makes in our cashflow situation.

Step three: Get rid of toxic debt.
As far as expenses in your budget go, there is a huge difference between a food bill and debt repayment. Hopefully, your debt had a very relevant purpose initially, but repaying it at a high interest rate makes an ugly dent in a monthly budget. Focus on one debt at a time, focusing first on those with the highest interest rates.

Step four: Plan for risks.
Build up your savings by having an emergency fund available for the next time you face some unexpected nasty financial surprise. This is where insurance also becomes a critical tool in your financial plan: it gives you the opportunity to transfer the risk.

Step five: Start saving and find your #crazywaystosave
You have identified your goals, used your budget to determine and free up excess funds by getting rid of debt and managing your expenses, and covered your risks as best as possible. Now the only thing left is to do is invest your surplus funds to reach your financial goals and dreams.

#Crazywaystosave from SASI

1. Financial Wellness Days: Ask your employer to give mandatory time off to review your finances with a Financial Planner once a year. Regular meetings with a Certified Financial Planning Professional will help you remain in control of your finances.
2. Automated Savings: Debit orders to Savings Accounts allow automated saving. You can set up debit orders Tax Free Savings Accounts (TFSA), 32 Day Notice Accounts and Unit Trust Accounts.
3. 13th Cheque: Ask your employer payroll to save for a 13th cheque paid to you in December by lowering your salary. This extra pay cheque will allow you to ride out the Festive Period and New Year expenses without major impact on your finances.
4. Pension Fund Contributions: When starting a new job, ask your employer to default to the highest allowable retirement fund contribution percentage of your income. You can also ask your employer to review your current contribution. Best of all, all retirement funding contributions are tax deductible annually up to R 350 000.
5. Group Savings: Start of Join a Stokvel or Investment Club with family and friends. The group will encourage you and allow you to develop the discipline required to be a regular saver.
6. Savings Buddy: Ask a friend to be a savings buddy whom you meet with regularly to discuss your savings journey. By holding each other accountable, you can help each other to grow wealth.
7. Have the money discussion with your partner: Some people are conservative while others are free spirits when it comes to managing money. The truth is that talking about money makes many people feel uncomfortable, and couples may be inclined to avoid financial discussions because they fear the disagreements that may arise. However, by talking openly and honestly about money, couples can establish common grounds despite their differing money styles.
8. Baby Gifts: You can seed a child’s future savings by requesting baby gifts of cash to deposit into TFSA or even taking out a Retirement Annuity (RA) for a baby.
9. Children: Open Tax-Free Savings Accounts for all your children to maximize the benefit they receive from these accounts. Set up debit orders to contribute to these accounts as they grow up together with cash gifts they receive on birthdays etc. You can encourage grandparents and other family to also contribute regularly.
10. Domestic Help: Set up a Savings account or Retirement Annuity for your domestic helper. These important members of our families are often forgotten in future planning.
11. Retirement Fund Statement: By receiving your retirement fund statements monthly or quarterly, you can be encouraged to keep track of your savings to ensure that you have sufficient income when you retire.
12. Financial Products and Insurance: Shop around and use a financial institution that rewards consistent savers either through a high savings interest rate or cash back for no claims.

SASI July Savings Month 2019 – Spotlight falls on crazy ways to save this July Savings Month

 

Simple tools to make savings a source of happiness for all

 

July is Savings Month in South Africa, and this year the focus is going to be firmly placed on our country’s youth.   The South African Savings Institute (SASI), with support from Absa and the IDC, will use July Savings Month 2019 to focus on driving awareness around how savings relates directly to happiness, as well as encouraging the development of vital entrepreneurial abilities that will allow young people to create business opportunities to sustain their financial independence.  The core theme will be “#CrazywaystoSave.”

 

Gerald Mwandiambira, SASI acting CEO, says, “South Africa has 20 million young people aged between 15 to 34, but with a whopping unemployment rate of 52.4%, which is the highest in the world for this population group, the time has never been more critical to urge our youth to save and focus on entrepreneurship.   However, South Africa’s youth are faced with a frustrating lack of available guidance on the most basic of financial information.  South Africa’s household saving rate, which according to Trade Economics slumped from 0.40% to 0.20% in the third quarter of 2018, is a stark indication that parents are ill-equipped to teach their children how to save and create wealth, given their own struggles.”

 

The Savings Month Launch breakfast on 26 June 2019, facilitated by financial journalist Arabile Gumede, will feature a host of leading voices in finance education in a vibrant panel discussion to spark a national conversation on how everyone can find ways to save.  SASI has partnered with personal finance coach Mapalo Makhu from Women and Finance;  award-winning personal finance journalist Maya Fisher-French; Samke Mhlongo from TNC Wealth Partners; Nicollette Mashile from Financial Fitness Bunny and SASI acting CEO and My Money author Gerald Mwandiambira to provide tangible savings insights.  Usually attended by media, government and financial industry leaders, the launch will for the first time include members of the public via a social media invitation lottery. Social platforms will also host a competition to find South Africa’s most creative and crazy ways to save.

 

Mwandiambira says this year SASI will also be aligning with the Financial Sector Conduct Authority’s (FSCA) Consumer Education Department (CED) which is rolling out a Youth Financial Campaign in June.  Workshops will be hosted at roadshows in Gauteng, the Eastern Cape and Mpumalanga to grow awareness on financial management and encourage better financial decision-making amongst our youth.

 

“At the end of July 2019 it is hoped that South Africans will have developed a stronger awareness of the urgent need to begin equipping young South Africans with basic savings knowledge that can have long-lasting and substantial effects on their happiness, wealth creation abilities and earning power,” says Mwandiambira. “As US economist and Nobel laureate Paul Romer said while attending a conference in South Africa recently, the under-utilisation of South Africa’s youth talent is nothing short of a “human catastrophe”. SASI and its partners are sending a clear message – let’s work together to turn this around.”

 

(ENDS)

SA Savings Institute issues Black Friday warning and launches campaign to know your interest rates

Wednesday, 21 November 2018:

 

The South African Savings Institute (SASI) has issued a warning to consumers ahead of Black Friday and Cyber Monday against reckless spending and buying any items that they do not absolutely need as South Africa faces major economic and political crossroads. The mining sector, Standard Bank, SABC and other workforces are being affected by significant job losses in addition to the 27.5% rising unemployment rate. “It would be wise under these circumstances to save as much as possible in a volatile environment. Do not spend money you don’t have on things you really don’t need,” cautions Prem Govender, Chairperson of SASI.

 

“If you qualify for an end of year bonus, it would be better to pay off your debts and to invest the remainder than to squander it on TVs, designer outfits or a deposit on a new car.”

 

Know your interest rate

 

SASI’s annual festive season savings campaign kicks off and focuses on being aware of the interest rate you are getting on your savings. SASI has partnered with MyTreasury.co.za encouraging consumers to save money more wisely, simply by knowing what interest rates you are getting.

 

Whether you have a few hundred rand to put away each month or millions you are waiting to invest, a high-interest bank account is an important savings product that offers safe, consistent and reliable returns.  Over 16 million South Africans have cash in savings accounts, but the South African Reserve Bank statistics show that about 40% of this money sits in low interest accounts or attracts no interest at all.

 

MyTreasury.co.za is an independent price comparison website that offers a fast way to find the best savings account for the highest interest rates. Once you click on the best option for you, the bank will call you back to tell you more about it and can help you open the account.

Govender explains, “One of the easiest ways to start saving more or paying less is by knowing your interest rate. By switching services or selecting wisely, you can either save more today or grow your wealth quicker.”

 

So with such large gains from switching to higher interest rates, why do so many South Africans continue to keep their money in low or no paying accounts? Warren Kopelowitz, CEO of MyTreasury.co.za explains, “The savings market is opaque and complex so without using MyTreasury.co.za, it is virtually impossible to select the highest paying savings account that best matches your requirements. It is difficult enough to find bank rate data without comparing different rates across multiple banks and products.”

 

Consider savings groups

 

As the nation celebrates another year, SASI Acting CEO Gerald Mwandiambira said, “The need to collectively pool resources and save is now more important than ever. Families should consider savings groups and stokvels ahead of 2019. Even stokvels should shop for the account with the highest interest rate.”

 

SASI continues to advocate for saving but the reality for most South Africans is that surviving turbulent economic times is top priority. With this in mind, SASI’s theme for 2019 is “Back to Basics” encouraging consumers to budget for all expenses and focus on needs versus wants.

 

Mwandiambira adds, “Use SASI’s hash tag #CelebrateSavers, if you manage to save and then share with others to encourage them.”

 

The Institute, 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 around the country.  The institute will also visit various shopping malls as part of this year’s festive season campaign.

 

Tips to survive the festive season

 

  1. Resist sale, think save! Clearly distinguish between needs and wants.
  2. Make your own Christmas gifts and only take holidays you can afford.
  3. Have a clear budget for your requirements in the New Year.
  4. Use free online tools to track your spending and debt and know where every cent of your income goes.
  5. Pay cash and don’t be trapped by easy credit.
  6. If you are looking to save, find the best interest rate on a website like MyTreasury.co.za
  7. Visualise what you want to save for and start saving more. Save your end of year bonus and watch it multiply.
  8. 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 627627.

 

ENDS

 

Photographs and images available here: https://drive.google.com/open?id=0B3wp-ExYb5cBcG9ZWEcwSkpKRUU

 

For further information, please contact Michelle K Blumenau, Turquoise PR & Marketing Communications T 083273 9891 michelle@turquoisepr.co.za

 

SASI National July Savings Month 2018

The South African Savings Institute (SASI), National Treasury and partners will be hosting a VIP and media breakfast to launch National Savings Month 2018.

The theme for this year’s National Savings Month, which runs for the month of July, is “Employer Assisted Saving”

Gerry Anderson, SASI Deputy Chairperson, will deliver the keynote address and Jan Moganwa, Absa Chief Executive: Retail Banking, will share the keynote address from the sponsor.

A panel that represents a selection of expert views will debate ideas and thoughts on a blueprint to encourage individual saving in South Africa through employer encouraged saving. Key panelists will include Dr Lesego Rametsi, Maya Fischer-French to mention a few.

 

Date: Wednesday, 27 June 2018
Time: 07:00 – 10:30
Venue: The Venue Melrose Arch
17 The High Street
Melrose Arch

GPS coordinates S 26 08’00.0”, E 28 04’05.1”

Dress code: Business attire
  .

 

For any queries please contact Joan Lema at Joan@savingsinstitute.co.za

 

#SavingsMonth
www.savingsinstitute.co.za

SASI National Savings Month 2018, in partnership with Absa.

SASI Celebrate World Savings Day

The South African Savings Institute (SASI) is an independent non-profit organization dedicated to developing a robust culture of saving in South Africa.

At SASI’s launch in April 2001, then Finance Minister, Trevor Manuel, drew attention to the poor savings rate; disparate living standards; lack of financial literacy and the poor growth of our economy. He noted that these concerns may all be mitigated by an improvement in savings culture by all sectors of the South African population.

Today SASI Celebrates World Savings Day, 31 October 2017.

The World Savings Day was established on October 31, 1924, during the 1st International Savings Bank Congress (World Society of Savings Banks) in Milano, Italy. The Italian Professor Filippo Ravizza declared this day the “International Saving Day” on the last day of the congress.

World Savings Day or World Thrift Day was established to inform people all around the world about the idea of saving their money in a bank rather than keeping it under their mattress.

SASI Chairperson Prem Govender has shared, “Most South Africans are struggling to save not only due to income challenges, but also the lack of willpower and commitment.”

SASI Acting CEO Gerald Mwandiambira says “In order to save, the primary requirement is an income. This year we are encouraging more employer encouragement to the savings process by assisting with automation but also by accepting that financially stable employees make productive employees.”

SASI will be launching the 2017 Festive Season Savings Campaign on November 23.

Ends

Focus on alternative savings during July Savings Month

The 2017 SASI (South African Savings Institute) July Savings Month was launched today in Sandton by Orlano Makubela, Chief Director of Financial Investments and Savings at National Treasury, and Sazini Mojapelo, Group Head of Citizenship at Barclays Africa, with a focus on encouraging alternative savings solutions. A panel of industry experts discussed developing alternative mechanisms to help South African consumers, already under pressure and over-indebted, to save.

Absa partnered with the South African Savings Institute (SASI) to launch National Savings Month, joining anchor sponsor the IDC and other long term partners across the financial services industry. Mojapelo says, “Our decision to partner with the South African Savings Institute echoes our commitment to Shared Growth through which we use our resources, the talents of our people and our expertise to make a positive difference in society. One of our commitments in this regard is Financial Inclusion, which includes financial literacy training, and looks to encourage South Africans to recognise the importance of saving and to save.”

SASI Chairperson, Prem Govender, says that following South Africa’s ratings downgrade and subsequent effects on the economy, consumers will increasingly be under financial pressure and need to improve both knowledge and attitudes to saving. “Savings Month has been designed to remind consumers, via the media and other channels, to strive towards financial freedom or remain continuously vulnerable. Cultivating a culture of savings and promoting alternative savings solutions in all spheres of life is our focus for 2017.”

SASI believes employers can also play an important role.  “Many South Africans are struggling to save not only due to income challenges, but also the lack of willpower and commitment. In terms of alternative savings solutions, we are involving employers this year and suggesting ways to facilitate or automate the savings process for those with an income, such as garnish savings options into a tax free saving account and 13th cheques structured as a savings tool.”

Gerald Mwandiambira, SASI acting CEO, emphasized the importance of people having a savings buffer in tough economic times. “Research shows that savers with a buffer enjoy improved emotional wellbeing, greater resilience to external market shocks and, importantly, an increase in productivity at work. We need employers to get involved in the savings process by assisting with automated savings programmes, especially considering that financially stable employees make productive employees.”

Mojapelo agreed, saying, “Persistent unemployment and the rising costs of living, made worse by historical spatial development patterns, means the average lower income household faces far greater pressures than many of us imagine. For those that can save, it is important that they use all the instruments available to improve their long-term financial sustainability. The responsibility for enacting these critical behavioral changes is a shared one, and we see a role for individuals, financial services providers but also for employers and HR professionals. Employers have a significant role to play in guiding their employees to make those small behavioral changes. HR professionals should be recommending tweaks to employees such as regularly reviewing and adjusting their pension fund contributions. They should also be educating employees to start building a savings buffer in case things go wrong.”

SASI has been dedicated to developing a robust culture of saving in South Africa since 2001. Govender says, “According to South African Reserve Bank (SARB) figures, in the last 16 years we have seen a decline in our savings rate, reaching a record low of -2.70 in 2013. However, we are now seeing small increases off a very low base, with the Household Saving Rate in South Africa increasing to -0.30 percent in the first quarter of 2017 from -0.50 percent in the fourth quarter of 2016.”

Govender further highlights that we are starting to see an overall reduction in household debt. The SARB bulletin for the first quarter of 2017 shows that, on an annual basis, growth in household debt slowed from 4.6% in 2015 to 3.9% in 2016, and the ratio of household debt to disposable income edged lower from 76.9% to 74.4% over the same period. “Recent improvements in the debt rate can be attributed to The National Credit Amendment Act 2016, which has imposed more stringent affordability requirements on borrowers, as well as a Nation that has simply used up all available credit,” says Govender. “Young South Africans are increasingly relying on credit to provide for basic needs, and there is a growing culture of people living way beyond their means and getting trapped in a cycle of short-term debt. Financial literacy education from an early age is vital to counteract this trend.”

Govender believes that we need to move away from negativity around South Africa’s savings rate to developing innovative savings alternatives and reinforcing positive savings behaviour. “Every Savings Month we work with our partners, including the large financial institutions that play such an important role in sharing knowledge, to find ways to educate and empower South Africans to save more. The household savings agenda is a key national priority. We believe that South Africans can save and invest more domestically for the greater good of our economy. As we sit in a technical recession, it is a fact that domestic savings can be a driver of internal economic growth. There has never been a better time to save than now.”

Alternative Savings Methods – Tips from SASI to help you save

Saving is not only dependent on income, it is largely dependent on willpower and discipline.
These solutions allow savers to have willpower and discipline by passing it on to others.

  1. Set a Target: The reason why many of us do not save is because we do not have set targets. It is important to set and write down important savings targets such as an Emergency Fund, Holiday Fund and other targeted savings. Do you know your targets?
  2. Automated Savings: Debit orders to Savings Accounts allow automated saving. You can set up debit orders Tax Free Savings Accounts (TFSA), 32 Day Notice Accounts and Unit Trust Accounts.
  3. 13th Cheque: Ask your employer payroll to save for a 13th cheque paid to you in December by lowering your salary. This extra pay cheque will allow you to ride out the Festive Period and New Year expenses without major impact on your finances.
  4. Pension Fund Contributions: When starting a new job, ask your employer to default to the highest allowable retirement fund contribution percentage of your income. You can also ask your employer to review your current contribution. Best of all, all retirement funding contributions are tax deductible annually up to R 350 000.
  5. Financial Wellness Days: Ask your employer to give mandatory time off to review your finances with a Financial Planner once a year. Regular meetings with a Certified Financial Planning Professional will help you remain in control of your finances.
  6. Group Savings: Start of Join a Stokvel or Investment Club with family and friends. The group will encourage you and allow you to develop the discipline required to be a regular saver.
  7. Savings Buddy: Allow your partner or friend to be a savings buddy whom you meet with regularly to discuss your savings journey. By holding each other accountable, you can help each other to grow wealth.
  8. Baby Gifts: You can seed a child’s future savings by requesting baby gifts of cash to deposit into TFSA or even taking out a Retirement Annuity (RA) for a baby
  9. Children: Open TFSA Accounts for all your children to maximize the benefit they receive from these accounts. Set up Debit orders to contribute to these accounts as they grow up together with cash gifts they receive on birthdays etc. You can encourage grandparents and other family to also contribute regularly.
  10. Domestic Help: Set up a Savings account or Retirement Annuity for your domestic helper. These important members of our families’ are often forgotten in future planning.
  11. Retirement Fund Statement: By receiving your retirement fund statements monthly or quarterly, you can be encouraged to keep track of your savings to ensure that you have sufficient income when you retire.
  12. Financial Products and Insurance: Shop around and use a financial institution that Rewards consistent savers either through a high savings interest rate or cash back for no claims.

(ENDS)

www.savingsinstitute.co.za

#celebratesavers

Photographs: https://app.box.com/s/4w4q54wxqfdame9i19skn2wn97mqocbf

Speeches: https://app.box.com/s/4w4q54wxqfdame9i19skn2wn97mqocbf

  • Orlano Makubela, Chief Director of Financial Investments and Savings at National Treasury
  • Sazini Mojapelo, Group Head of Citizenship at Barclays Africa

For more information contact:

Tamaryn Brown on behalf of SASI
Plato Connect
Tel: 084 3510560
Tamaryn@platocomms.co.za

Obakeng Nyokong on behalf of Absa, Fleishman Hillard
Tel: 079 684 3623
Obakeng.nyokong@fleishman.co.za

 

SASI July Savings Month 2017 Launch

The South African Savings Institute (SASI) will launch its traditional Savings Month Campaign at a breakfast event in Sandton on Wednesday 28 June 2017 where the Minister of Finance, Malusi Gigaba, will deliver the keynote address.

 

“Savings Month is SASI’s national savings awareness campaign, and the theme for this year’s drive, which runs during July, is “Alternative Savings Solutions,” says Gerald Mwandiambira, Acting CEO of SASI.

 

Savings Month has been designed to remind consumers, via the media and other channels, to strive towards financial freedom or remain continuously vulnerable. “Cultivating a culture of savings and promoting alternative savings solutions in all spheres of life is our focus for 2017.” The Minister’s keynote address will be in response to these alternative savings solutions and SASI’s vision to improve individual savings in South Africa.

 

At the event, Barclays Africa CEO Maria Ramos will also share her thoughts on the state of savings in our country, after which a panel of industry experts will discuss ideas and thoughts on a blueprint to encourage individual saving in South Africa.

 

“South Africans generally don’t have a savings pool to tap into in times of emergency and tend to cash in their retirement savings when times are tough. For this reason, National Treasury introduced vehicles such as the Tax Free Savings Account in 2015 to encourage household savings. SASI welcomes this strategy and is encouraged to pursue this mandate even more aggressively. Hence a key focus of this year’s savings campaign will be to promote savings literacy,” says Mwandiambira.

 

SASI will be implementing a number of initiatives during July, aimed at instilling a culture of saving.

 

“As responsible South African corporate citizens, we want to demonstrate our commitment to economic sustainability and to promoting the financial well-being of all South African consumers. We believe the Savings Month activities will further the spread of the savings message across the country and provide the necessary information to assist consumers to make informed savings decisions.”

 

Events planned for 2017 Savings Month Awareness Campaign include:

 

 

Event Date Venue Audience
SASI Savings Month Launch Breakfast 28 June 2017 Sandton VIP Guests
Media Campaign 1 July – 5 August National Radio & TV Public
Communities Campaign 6 July – 30 September National Selected Communities
Varsity/TVET Campaign 6 July – 30 September National Selected Campuses

 

 

Savings tips to survive 2017

 

  1. Resist SALE, think SAVE! Clearly distinguish between needs and wants.
  2. Have a clear budget for your requirements in every month. Create a budget using the SASI budget tool or phone apps, available at NO COST.
  3. Use free online tools to track your spending and debt and know where every cent of your income goes.
  4. Pay cash for all purposes and don’t be trapped by easy credit – in fact, cut up those store credit cards!
  5. Visualise what you want to save for and start saving more.
  6. 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.