“Illiteracy is by far the biggest contributors to our low level of savings and high levels of credit, but definitely not the only one. Others are:

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• People have developed almost a culture of immediate satisfaction – they do not want to save and wait for something- they want it now.

• Societal pressure to ‘measure up to the Jones’, thus living above their means and using credit to finance that.

• Feeling that people do not want to and do not need to plan their finances – they want freedom to spend as they feel fit and do not want to think about their future (like providing for their retirement).

• South Africa has a ‘spending culture’ and not a ‘savings culture’. We need to learn to save first and then spend, even if that means only saving an amount of R10.

• Linking to this, a lack of control. Debt and expenses mounts up and people loses control, but do nothing to regain control – almost hoping the problems will disappear. This happens to even educated individuals who are busy and loses control or ignore basic principles of financial planning.

• Challenging economic circumstances where individuals use credit to survive, without being able to pay it back and without scope for saving.

 

“Addressing financial literacy is crucial for South Africa, in the midst of challenging economic conditions, as it will eventually help people to get out poverty. A financially literate population will understand financial facts and will enable them to make informed decisions, know where to go for help, and take actions that improve theirs and the country’s financial health.”