According to worrying statistics from HSRC's 2015 South African Social Attitudes Survey, a troubling 69% of South Africans do not have an emergency fund or “rainy day” money, while 40% have no retirement plan.
These figures, from the survey's financial literacy section, were released in March 2017 at the Sowetan Dialogues and have underscored the need for better financial education in the country – a change long called for both by charitable organisations and financial businesses who provide loans online, alongside other financial services.
This fresh batch of worrisome statistics poses troubling questions about the average South African's ability to make sound decisions about their personal finances and their ability to survive periods of financial turbulence. With President Zuma's future uncertain and the country's credit rating recently downgraded to junk status, having enough savings and financial acumen to weather potentially tricky economic storms may become more important than ever before in the near future.
The survey, which was designed to elicit responses from a representative portion of South African society, interviewed 3,000 citizens aged 16 years and above about their financial habits and attitudes. The results were revealing:
These figures show a disturbing lack of financial foresight amongst everyday South Africans, whether their lack of savings are a result of economic pressures or short termism. The numbers stand in stark counterpoint to the 81% of respondents who claimed to take a “considered approach” to their finances – a contrast which suggests equally worrying levels of over-confidence in financial knowledge and abilities.
But it may not all be doom and gloom. Although the survey ranked South African financial literacy as “low to moderate”, the average score of 55 out of 100 was not as abysmal as many other global studies of financial awareness have previously suggested. Although understanding of financial planning has dropped slightly, financial control has seen a slight rise, while financial knowledge has remained stable over the past six years.
More in depth results reveal a predicable truth behind the numbers. While educated South Africans and citizens in higher economic and social groups have superior financial literacy, those in lower social-economic groups trail far behind when it comes to financial awareness. Clearly, this is the section of society which most needs financial education.
What type of financial education system do you think would help South Africans learn to manage money more effectively? Have your say.
By Stephen G Davies MSc
The author writes about world news, finance, technology, business and covers product reviews for global firms. Stephen has written for digital agencies, e-zines and maintains a passion for updating a number of his own blogs. Writer by day, reader by night, Stephen enjoys being aware of world events and affairs and is passionate about related topics.