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Young People and the culture of SAVING!

By Mzukona Mantshontsho

South Africa has one of the lowest savings rates in the world. The GIBS Savings Index shows that in the last 20 years, the savings rate in South Africa has steadily declined and is now sitting at 16.3%. This is also exacerbated due to the impact of the COVID-19 pandemic, which has placed many individuals and families under financial stress, making it hard to traditionally save the little that they could.

Are you surprised that we are battling with Saving as a Nation?

It does not come as a surprise that South Africans are finding it hard to save because according to Stats SA 49,2% of the adult population live below the poverty line. This means that most people in our country cannot afford to save and often go to bed hungry. Other contributing factors are poor spending habits, lack of financial education and impulsive buying.

Where do we start with children, how do we introduce the subject and how early in their lives?

It is important for parents to teach their children about saving and to encourage a savings culture as early as possible. Instilling saving habits from an early age will serve children well for the future. Although tricky – the idea of ‘putting money away to pay for something or even save for a goal whether big or small’ can be tough for an eight-year-old to understand – with a little help, and some fun games and tools, they can be well on their way to saving. Try these simple tips:

  • Drawing a picture to explain the concept

To create a culture of saving, start by finding something your child wants or needs. Explain to him or her that this item isn’t for free and that they need to work to earn money to buy the things that they want. Together, find out how much the item costs and how long your child will need to save his or her pocket money to get it. A savings chart can help your little ones keep track. Every time they get their pocket money, or chore money, they can tick a box on the chart. This shows them how much money they’ve saved and how much they’ll still need to, to get the thing they want.

  • Upgrade the piggy bank

Piggy Banks have been a fun way for kids to save, because they can’t open it for a certain period of time – building that anticipation pushes them to keep saving until it is full and heavy. If you want to upgrade to a safer option, consider contacting your bank for some options that kids can use to save their money – Standard Bank offers (sum)1 bank account is ideal for kids 16 years and younger. This account teaches kids to become financially savvy by giving them an option to send mom or dad requests for data, airtime or spending money; they can learn how to earn money for doing their chores at home with help from the app; they can start saving for the stuff they want with free transfers to a savings account and they can get 250MB or R25 airtime for free every month.

  • Make saving fun

Rewarding your children when they reach a saving milestone can encourage them to continue earning and saving their money. Don’t forget to do your bit, saving with your children can help show them just how fun and cool saving really is, as you reach new savings goals together, and reap the rewards.

Practical examples of savings options for young people?

The first step is to decide whether it’s a the long-term or short-term. Once a decision has been made, it becomes easier to select an appropriate savings vehicle. There are various tools available to youth to help them bolster their savings.

For short term goals such as setting up an emergency fund, or paying off debt, a simple savings account does the job, this offers flexibility when to access the funds when there’s a need. These accounts seldom have a minimum monthly income requirement and have no penalty fees when withdrawing from the account. Most banks will offer a savings account with an interest rate that increases in relation to the balance.

For medium-term goals such as the purchase of a car, a notice account can be used. A notice account is essentially a savings account which requires a notice period for withdrawals. The interest rate is often higher on notice accounts. This is a brilliant way to avoid making rash decisions or “passion” purchases.

For long-term goals, like retirement or education funding, it is advisable to consider an investment account that does not allow access to the fund before a pre-set period. For this, a Tax-Free Savings Account is perfect – while this savings structure allows withdrawals at any time, one needs to stay invested for the long term to truly reap the rewards. The idea is that the investment vehicle is used to invest for an extended period in order to benefit from the magic of compounding interest.



Mzukona Mantshontsho is the founder of Nyakaza Media Solutions. Nyakaza Media Solutions is an organisation that was established to help community organisations, business entities, and schools to research, write, document, report, analyse, edit, publish newsletters or bulletins in hard-copy, on-line and maintain websites with the relevant content as per the editorial policy of that organisation, school or entity. Nyakaza Media Solutions has a vision to promote and bring dialogue to communities, businesses and schools about issues that affect them. Nyakaza Media Solutions is on a mission to develop and encourage communities, businesses and learners to celebrate the good, applaud excellence, welcome growth, strive to be better individuals, businesses and communities, want more knowledge, discourage bad and counter-productive behaviour as well as communities, businesses and learners that want to be great SOUTH AFRICANS. Nyakaza Media Solutions is making use of Yo School Magazine as a platform that learners in all schools to make use of to write their stories.

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