South Africans are among the world’s worst savers according to Fin24, and what is most disturbing is that only 6% of South Africans are able to retire comfortably. This is a huge concern and what is clear is that South Africans need to be more aware of the importance of saving, the benefits of saving and how best to go about it.
Getting credit is much easier nowadays, and this often works against the choice to save. This is the trap that unfortunately too many South Africans are falling into. But saving is important for many reasons. Firstly, you become financially independent. There is no better feeling than having the freedom to make financial choices in your life separate from your monthly expenses.
Another reason is that often we are presented with unforeseen expenses like water leakages in your home. We live in a society that is quite unpredictable, therefore we needs to save for such unpredictable days.
We also need to think about retirement and possible retrenchment plans. We all want to retire comfortably, therefore one should also prioritise saving towards retirement. Another reason to save is if you want to buy property or a car in the future. Today banks require up to 10% upfront deposit for an individual to be approved for a home loan. Its an unfortunate reality that the majority of home-owners refinance the deposit that is needed and other costs that come from acquiring loans from other sources, which is like financing your debt with more debt.
Debt and debt settlement is another reason to save because you can utilise your savings to settle your credit cards and loans. It is better to settle your debts as soon as possible because the interest charged every month continuously increases the amount you owe.
There are huge emotional, psychological and physical consequences to always living stressfully from hand to mouth, pay cheque to pay cheque, so to avoid crashing from crisis to crisis we all need to put some money aside to avoid living a stressful life.