South Africans Show Saving Savvy

South African consumers are becoming more financially savvy and starting to put away money for a rainy day, or for retirement funds. Whichever one happens to come first.

Either way, a new MasterCard Survey, “Consumer Purchasing Priorities: Money Management,” revealed that 70 percent of South Africans have plans to save “the same or more” money in the next six months as they have for the past half-year. This was actually a decline from the last survey’s responses, in which 92 percent of consumers said the same.

However, there is more to the story.

Roughly 83 percent of the same consumers also admitted that they were in a state of ambiguity when it came to the economy’s future. Consequently, they have been storing away money for “precautionary measures.” This figure was a 16 percent increase from the prior survey conducted six months ago.

Forty-seven percent of participants who said they were preparing to save “the same or more” also listed retirement as the number one reason for saving. In comparison to the previous survey results, this was a 10 percent increase. Saving for future investments was listed as the second highest reason, with 35 percent.

Why is this information important?

“The low savings rate in South is widely reported,” explained Philip Panaino, division president at 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.”

Thinking About Retirement

MasterCard’s survey prompted respondents and asked them how much they had planned to save in the coming months. Forty-five percent said they would save about 1 to 10 percent of their monthly income. Aspiring to save more, 18 percent said they would save 11 to 20 percent, while an ambitious 7 percent plan to save between 21 and 30 percent.

When asked about retirement goals, nearly 50 percent said they felt comfortable retiring between the ages of 51 and 60 because they claimed they would have enough money saved by then. Forty-three percent said they would wait until turning between 61 and 70 before retiring.

Interestingly, last year South Africa’s average retirement age was 60 years old, and this year the average came to 60.

Consumers in South African have conveyed a good sense about the importance of retirement planning, as 88 percent of respondents checked off, “it is never too early to have a financial plan.”

“What If” Scenarios In Regards To Income

South African respondents were asked about the items they would forgo if they needed to cut costs due to a loss of household income. The majority listed expenditures such as dining out, entertainment and buying gifts as the top options. Only 10 percent claimed they would cut back on how much money was put into savings.

Conversely, participants were asked about spending habits in the event there was an increase in household income.

Respondents replied responsibly and said if given more money, they would make it a top priority to store more into regular savings. Following this option, others said they would plan a holiday abroad or pay off debt incurred from home renovations.

“Overall, the research results reveal that South Africans are largely aware of the need for careful money management,” said Panaino.

“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.”

To read the full story at MasterCard click here.