South Africans have been encouraged to make smart financial decisions by saving for the future as a recent survey on financial behaviours of adults show a concerning pattern.
According to the recent Baseline survey on financial literacy in South Africa, only 46% adults tend to live for today rather worry about providing for their future while 44% stated that they have not been actively saving and a third of South Africans have no retirement plan.
“As the National Treasury, we are worried about the statistics for people who expect to rely on government pension because in the absence of growth, we do not want to end up with a society that relies on government handouts as opposed as to saving money for their own future,” Acting Tax and Financial Sector Policy Division Deputy Director-General, Mmakgoshi Lekhethe, said on Friday.
Lekhethe was addressing the virtual launch of Money Smart Week South Africa 2023 (MSWSA 2023) under the theme “Plan your money, plant your future.”
Money Smart Week is the country’s largest coordinated financial literacy campaign aimed at motivating and empowering South Africans to become better educated about their finances. This year’s campaigns runs from 28 August until 03 September 2023.
South Africa scored at around 51% of individuals that are financially literate in the survey, which was conducted by the Financial Sector Conduct Authority (FSCA) in partnership with the Human Sciences Research Council (HSRC).
The survey further indicates that only 26% have funds saved for rainy days but those will last for only three months.
“The financial decisions we make today will make a significant impact on our security and our standard of living given the current economic condition that people find themselves in and therefore saving and being money smart is a strong foundation towards securing your future,” Lekhethe said.
While she acknowledged that financial literacy might not address all of consumers’ vulnerability, Lekhethe said financial literacy could pave the way for positive actions, which are important for wealth creation and preservation.
These actions include saving for a rainy day and for long term goals such as retirement and making an informed decision about retirement.
“As government and regulators, we have to do our best in providing protection to consumers. An informed consumer can demonstrate improved capability in terms of making decisions about their financial future,” she said.
Lekhethe expressed concern about the emergence of fraudulent scams schemes that take advantage of people’s vulnerabilities.
The Baseline survey on financial literacy in South Africa examines the financial knowledge, attitudes, and behaviours of adult South Africans as part of ongoing efforts to better understand, monitor, and promote financial literacy in the country.