The importance of saving for South Africans

South Africans have long grappled with low savings levels, high consumer debt, and increasing financial pressure. As July marks National Savings Month, it serves as an opportune time to reflect on the importance of disciplined saving, not as a luxury for the privileged few, but as a financial necessity for all.

At its core, saving is a cornerstone of financial well-being. It creates resilience in the face of life’s inevitable disruptions, such as a retrenchment, medical crisis, or unplanned household expense. Without access to emergency funds, many are forced to rely on costly short-term debt, which often initiates a cycle of borrowing that is difficult to escape. As such, establishing and maintaining a savings buffer not only protects against the unexpected but also fosters the kind of financial independence that enables individuals to make more informed long-term decisions.

Savings is also critical in achieving life’s more aspirational goals, such as funding for a child’s education, paying a deposit on a home, or taking a well-earned break – all of which are easier to reach when supported by a structured savings strategy. More importantly, consistent saving throughout one’s working life can radically improve the quality of retirement, the costs of which remain underestimated, especially in light of increasing human longevity.

Despite these well-known benefits, South Africa faces a persistent savings shortfall. Household saving rates remain worryingly low, which, combined with the rising costs of living, leaves little room for surplus. That said, the absence of savings is not always a function of income. In many instances, it reflects deeper behavioural, social, and cultural dynamics.

However, the absence of savings is not always a function of income. In many cases, it reflects deeper behavioural, social, and cultural dynamics, with a short-term financial mindset being a significant contributor. Many people struggle to delay gratification in favour of long-term rewards, particularly in this age of instant everything. Further, cultural expectations and family obligations can also make it difficult to prioritise personal financial goals.

In some communities, there is strong pressure to support extended families, making individual savings seem selfish or unattainable. At the same time, many people feel that saving is pointless because the amounts they can set aside seem too small to matter. The compounding effect of time and consistency is often misunderstood or underestimated.

Added to this is a lack of trust in financial institutions. Past experiences with poorly explained products, opaque fee structures, or service failures can leave consumers feeling disillusioned. It’s also worth noting that for some, the financial system appears complex, exclusive, and difficult to access. Sadly, the result is that many opt to remain outside of formal savings mechanisms, missing out on the structure, security, and potential growth that regulated vehicles provide.

One of the most effective strategies in creating a savings mindset is to treat saving as a non-negotiable monthly expense, paying yourself before settling other costs. Setting up an automatic debit order into a savings account – even if you start with a modest amount - at the start of each month reinforces this habit and makes it easier to stay consistent. As financial capacity grows, so too can the savings amount. Linking your savings to specific, time-bound goals – such as an emergency fund, family holiday, or school fees – can also be effective. 

Selecting appropriate savings vehicles is another pillar of successful saving. For short-term goals, such as an emergency fund, liquidity is essential. A basic bank savings account—despite its limited returns—offers immediate access to funds when life throws a curveball. For slightly longer-term goals, fixed deposits and notice accounts offer higher interest rates, provided the funds can be left untouched for a set period. Money market funds strike a useful balance, providing relatively attractive returns while maintaining access and low risk.

For long-term savings and wealth accumulation, Tax-Free Savings Accounts (TFSAs) and unit trusts are valuable tools, keeping in mind that TFSAs offer tax efficiency on interest, dividends and capital gains, up to the annual and lifetime contribution limits. For those who prefer a community-based approach, well-structured stokvels and savings clubs can provide mutual encouragement and discipline, although clear governance and transparency are essential to avoid conflict and mismanagement.

Ultimately, the real key to saving lies not in how much one earns but in developing the habit of consistent, intentional action. Saving is a life skill that can be learned and refined over time, and the earlier the habit is formed, the more powerful its impact.

As we reflect on National Savings Month, we are reminded that the act of saving is a quiet declaration of self-respect. It is a decision to take control of one’s financial future, to resist the pull of instant gratification, and to build a more secure, independent life. If you do one thing today, start saving.

* Odendaal is a Certified Financial Planner at Crue Invest.

PERSONAL FINANCE