July is the national savings month, most people don’t know this and sadly most don’t care, because they don’t save. At some point, most consumers have come across money tins, whether it’s in a banking advertisement, as a ceramic piggybank, or an actual tin with a rectangular slit on the top, it’s not a foreign notion. These are traditionally used to teach children to save up their change and extra money, good principles that hopefully will last a lifetime.
It seems however, according to the latest statistics by the South African Savings Institute (SAIS) that adults need them more than children do. South Africans are spending 98.3% of their earnings, saving a insubstantial 1.7%! Retirement or college fund, anyone? And there is more bad news, South African household debt is at 75.4%! These are absolutely phenomenal and disturbing statistics. Bankruptcy, anyone?
Recently a news program was done on the excessive amount of debt that the nation has been getting into, especially students, banks are making it ridiculously easy for them to get credit cards and they are spending up a storm. The information age that we live in has made trends easily accessible to the masses, big name brands and expensive lifestyles are plastered all over the streets on billboards, banners, in magazines and the message is “NOW”.
The “You have to have it now!” mentality, is so pervasive that it has infiltrated diverse demographic s, debt doesn’t discriminate. Consumers are actively being encouraged to get into debt- whatever they want, a store can set up an installation plan just for them. Very few people actually own the things in their homes, from their beds, to fridges, to televisions and yet they continue to accumulate debt. Buying things using cash is considered inconvenient and frankly prehistoric.
Post independence, masses rushed to develop the lifestyle that had been denied to them under apartheid, and twenty years down the line, judging from the statistics, consumerism is the new colonialism. Trapping scores of people and being brutally oppressive. Debt is taking over the lives of ordinary people and whole industries are flourishing because of it, some legal like debt collectors, pawn shops and on the other side of the law, loan shark operations. A broken leg, anyone?
Something is fundamentally missing in schools, homes and organisations, it looks like the culture of saving money is alien to many South Africans and they often realize too late that the opulence they have built around them is a fantasy that can be destroyed by defaulting on payments. The debt not only puts pressure on finances, but on families, marriages and individuals. Finance Minister Pravin Gordhan has mentioned on occasion that “South Africans must develop an attitude of saving for major expenses and goals, instead of relying on easy credit and long repayments”
The government clearly isn’t turning a blind to this issue, it is planning on launching tax-exempt short and medium term savings products, to encourage people to save more, but it should go beyond that. Debt may not receive the attention that other national issues such as HIV/AIDS get, but tackling them should be done in the same manner, starting at the grassroots, going into classrooms, onto the streets, because this is something that puts everyone at risk financially. It impacts not just the personal lives it touches, but also the stability of the economy, yes, business want consumers to spend more, but bankrupt consumers don’t add much to the economy. It’s time for the nation to buckle up and save up.