Every July, National Savings Month reminds South Africans of the importance of saving, but with rising costs, is saving alone enough? Discover the financial realities and solutions for households struggling to save.
Image: File
Every July, National Savings Month encourages South Africans to put money aside for the future. It is an important reminder.
Financial experts consistently tell us that building an emergency fund is one of the best ways to strengthen our financial resilience and prepare for life's inevitable setbacks.
However, it is also becoming increasingly difficult advice to follow. For millions of South Africans, the challenge is not understanding the importance of saving. It is finding money left over at the end of the month to save at all.
Households continue to face relentless financial pressure.
Fuel prices remain elevated, transport costs continue to rise, food inflation is squeezing grocery budgets and municipal tariffs have increased across many parts of the country.
By the time essential expenses have been paid, many families have little room left to build meaningful savings.
Recent research illustrates the scale of the challenge. The inaugural Franc Wealth Index found that 87% of financially active South Africans have less than three months' income set aside for emergencies, while more than two-thirds could not cover even one month's unexpected expenses.
At the same time, TransUnion's latest Consumer Pulse Study found that 41% of consumers cite inflation as their biggest financial concern, while 35% expect to be unable to pay at least one bill or loan in full.
Yet the same research also shows that consumers are trying to adapt.
More than half of respondents said they had cut discretionary spending over the past three months, 35% had accelerated debt repayments and almost a third had increased emergency savings or stokvel contributions. South Africans understand the importance of building stronger financial foundations. For many, the challenge is having enough financial breathing room to do so.
That reality should sit at the centre of the National Savings Month conversation.
Saving remains one of the most important financial habits anyone can develop and should always be encouraged. But financial resilience is about more than savings alone. It is also about ensuring that households have access to the right financial tools when unexpected costs arise before they have had the opportunity to build a financial cushion.
Life rarely waits until your savings account is ready. A burst geyser, urgent car repairs, a child's unexpected school expense or an emergency medical bill can quickly place enormous pressure on a household budget.
This is where responsible, regulated short-term credit has an important role to play. Credit should never replace saving. But where an emergency arises before a household has had the opportunity to build an emergency fund, responsible, regulated credit can provide an important financial bridge.
Too often, borrowing and saving are presented as opposites. In reality, they should work together. Savings should be the first line of defence wherever possible. But where savings fall short, responsible access to regulated credit can help households manage temporary financial shocks without having to resort to far riskier alternatives.
The emphasis, however, must remain on responsible lending.
Legitimate lenders operating under the National Credit Act are required to conduct affordability assessments, disclose the full cost of credit, lend responsibly and comply with strict consumer protection requirements. Their objective should not be to encourage unnecessary borrowing, but to provide consumers with safe, transparent and regulated access to credit when it is genuinely needed.
Just as important is ensuring consumers have the information they need to make informed financial decisions. One of the more encouraging findings from the Franc Wealth Index is that financial wellbeing is influenced as much by behaviour as by income. People who consistently budget, manage debt responsibly, review their financial goals and build emergency savings generally achieve better financial outcomes, regardless of what they earn. The challenge is turning good intentions into consistent financial habits, particularly when household budgets are already under pressure.
Financial literacy should therefore extend beyond encouraging people to save. Consumers also need to understand how credit works, how interest and fees are charged, how to compare lenders, how to protect their credit record and, perhaps most importantly, how to recognise the warning signs of illegal lending.
This matters because financial need does not disappear simply because someone has no savings or cannot access regulated credit.
When households run out of options, many turn to informal lenders, commonly referred to as "mashonisas", operating entirely outside the law. These operators often charge excessive interest rates, use intimidation to recover debts and withhold bank cards, identity documents or personal belongings as collateral. The consequences can be financially and emotionally devastating.
Helping more South Africans avoid these outcomes requires more than stronger enforcement against illegal lenders. It also requires building financial confidence.
Consumers should feel equipped to compare financial products, understand their rights and make borrowing decisions based on clear information rather than desperation.
National Savings Month provides an ideal opportunity to broaden the conversation. Rather than viewing savings and credit as competing ideas, we should recognise that both have a place in a healthy financial system. Encouraging households to save remains essential, but so too is ensuring they have access to responsible, regulated credit when life inevitably throws up unexpected challenges.
Ultimately, financial resilience is not measured solely by the size of a savings account. It is built through a combination of good financial habits, informed decision-making and access to financial products that are transparent, affordable and designed to support consumers rather than exploit them.
National Savings Month should encourage South Africans to save wherever they can.
But it should also recognise the financial realities many households face. Until more families are able to build meaningful financial buffers, improving financial literacy and maintaining access to safe, regulated credit will remain essential to helping South Africans navigate life's inevitable financial shocks.
Nita Morgan is Director at Prime Loans.
Nita Morgan is Director at Prime Loans.
Image: Supplied.
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