The 2015 Old Mutual Savings & Investment Monitor, which surveyed South Africa’s employed, metropolitan individuals between 18 and 23 years (Z-Generation) on what they were saving for, revealed that the majority of respondents (84%) cited electronics, followed by home appliances and furniture (both 63%).
When asked what retirement savings vehicle they were using, only 34% listed a pension/provident fund.
Despite retirement lying ahead saving money is too seldom prioritised in South Africa, Rodney Msimango, senior investment consultant at Old Mutual Corporate Consultants, said, adding that many people here lack a psychological connectedness with their future self.
A common attitude among the youth is that ‘Savings can wait’, according to Msimango.
“A young person’s perception of what their life during retirement will be like is often unrealistic, considering their poor savings habits. We tend to see the retired version of ourselves in a completely financially stable position, when this is not likely unless we focus on it as a goal,” Msimango explained.
He urged young people who were fortunate enough to have a job to start planning ahead and save instead of focusing on immediate gratification.
“While we are living our lives, time is rushing by. Time is not only a valuable ingredient for saving and investing, it’s also something that cannot be replaced once it’s gone,” he said.
“There are far too many examples of people who reach retirement only to realise that they never prepared appropriately, never saved enough, started too late or just underestimated the amount of money necessary to maintain their standard of living.”
Msimango acknowledged that the problem of not saving enough was not confined to the country’s youth. However, he stressed that good savings habits needed to be instilled from the first pay cheque. Companies can play a defining role in educating their employees, he said.
“Often we find an individual is waiting for the right time to start saving or waiting until their salary is large enough. However with this attitude they are unlikely to ever start saving as there will always be expenses that consume income,” he explains.
“Salary increases are also often consumed by a higher standard of living, or by more responsibilities as a person’s life progresses and reaches milestones, such as marriage and children.
“A more forward planning attitude can make all the difference to the quality of your later years.”