July has been designated Savings Month by the South African Savings Institute. Going by current data, South African households don’t really save much. SA’s household savings ratio refers to the income saved by households during a certain period and is calculated and published by the South African Reserve Bank. At the end of 2019, our savings ratio was -0.20%. That means, as a country, we spent more money than we earned and didn’t save at all.
South Africans also use debt to cope with extreme financial pressures, which is reflected in the continued rise in credit card advances and the fact that we spent 72.8% of our gross income in 2019 to service debt, according to the central bank.
High levels of indebtedness can be directly linked to low levels of financial literacy. Financial literacy is your ability to make rational decisions when it comes to spending, saving, borrowing and investing.
This article is published in Business Live. Please follow the link below to read the rest of the article. https://www.businesslive.co.za/bt/money/2020-07-05-is-it-possible-to-save-in-difficult-times/