Household savings as a percentage of gross domestic product is a calculation used to assess how much individuals and households are saving instead of spending. According to the South African Reserve Bank and Deloitte’s 2023 Investment Outlook, South Africa’s savings rate was between 0.13% and 0.5% in 2022 and 2023, much lower than other emerging markets such as Brazil (16.9%) and India (10.8%), where people tend to save a higher portion of their income.
According to a 2023 Baseline survey on financial literacy in South Africa, 46% of South African adults focus on present financial stresses rather than saving for their future, with 44% not able to actively save part of their income, and a third having no retirement plan at all.
Saving is about more than putting money away for a rainy day; it can also be a tool for investing and building wealth, preparing for the future, and building financial resilience.
South Africa’s low savings culture is driven by factors including high debt levels, income inequality, unemployment, the high cost of living, resulting in many people’s focus on immediate financial needs. Lack of financial literacy is also a driving force behind this low savings culture, and the reason behind Money School – a free, online financial literacy programme aimed at Grade 11 and 12 learners to increase their ability to become more money savvy.
Money School covers the essential principles of saving, budgeting, investing, and responsible spending, laying the groundwork for understanding financial resources and investment tools. First launched in 2022, this national virtual financial literacy streaming platform, supported by Satrix, provides financial education to Grade 11s and 12s and to date, has targeted over 113 schools nationally.
“As a country, we struggle with financial literacy not being introduced in schools. Through initiatives such as Money School, we are advocating for the removal of barriers to financial literacy, simplifying the language and terminology and dispelling the myth that people need to have a lot of money to be money savvy,” says Duma Mxenge, Head of Business and Market Development at Satrix*.
He adds that introducing basic financial concepts during the early years can help shape responsible financial behaviours before poor habits form. Children in South Africa who are taught about budgeting, saving, and investing at a young age are more likely to carry these positive financial habits into adulthood, helping them avoid common financial mistakes.
Ideally, the rule of thumb is to save 20% of your monthly income, yet in reality, many people are not able to achieve this. Increased financial literacy starting from a younger age will not only have a positive effect on individuals but can also have a domino effect by positively impacting the economy too.
Through initiatives such as Money School, along with a collective effort by the financial sector, schools, government, and parents, increased financial literacy can help to empower a generation of savers and investors.
For more information, go to https://moneyschoolsa.co.za/.
Disclaimer
*Satrix is a division of Sanlam Investment Management
Satrix Investments (Pty) Ltd is an approved FSP in terms of the Financial Advisory and Intermediary Services Act (FAIS). The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision.
Satrix Managers (RF) (Pty) Ltd (Satrix) is a registered and approved Manager in Collective Investment Schemes in Securities.
While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSPs, their shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information.
About Satrix
Satrix is the leading provider of index-tracking investment products and exchange traded funds (ETFs) in South Africa, with assets under management of R240 billion* invested in the range of ETFs, index-tracking unit trusts, life pooled and segregated portfolios that are specifically tailored for client-specific mandates or retail funds.
Satrix pioneered index investing in South Africa, launching the flagship Satrix 40 ETF as the first locally listed ETF in November 2000. The business services the institutional, intermediary, and individual investor markets. Satrix has proven expertise in risk management, portfolio construction and index design.
A core part of the Satrix purpose is to drive the democratisation of investments for all South Africans, where SatrixNOW, the no-minimum online investing platform, is a key enabler providing access for South Africans to invest and “Own the Market”.
The multi-award-winning business holds the largest market share in the ETF industry in South Africa at nearly 38%^.
Visit www.satrix.co.za.
*Source: Satrix, 31 December 2024
^Source: etfSA.co.za – Market Capitalisation – SA Industry Report, December 2024
