South Africa’s tough economic conditions have left many consumers struggling to build emergency cash savings. According to Standard Bank data, more than half (52%) of entry level private banking clients have less than one month of their salary saved in immediately accessible cash savings available, to use in the event of unforeseen circumstances such as retrenchments or urgent medical procedures. Without the savings, many have had to resort to debt, eroding their ability to start building wealth over the long term.
In its analysis Standard Bank compared the value of cash savings (accessible within 24 hours) in the Prestige and entry-level Private Banking client bases, to their monthly salaries and fixed expenses. Of Standard Bank’s Prestige client base – those earning between R25,000 and R58,000 a month – nearly one in three (29%) had no accessible emergency savings.
In the higher income bracket, individuals earning between R700,000 and R1 million annually, over a third had no emergency savings at all, with 45% having savings that would last less than a month.
“The data shows that the ability to build adequate cash saving for use in an emergency, is not only dependent on earning a higher income” says Doret Jooste Head of Money Management and Advisory at Standard Bank. “Having cash savings on hand is the cornerstone of healthy money management and likely the most important thing to prioritise when you want to start building your wealth”, Jooste adds.
Why is this so important? “Having emergency savings helps you avoid taking unnecessary and usually expensive short-term debt when you need to cover an urgent expense,” says Jooste. “It also helps you stick to your plan when investing for the longer-term goals, such as for your kids’ education or retirement. Instead of having to divert your longer-term investments to cover unexpected expenses that pop up in the short run, accessible emergency savings allow you to stick to your financial goals and long-term plan to realise important goals and build wealth,” Jooste continues.
So, if it’s not about just earning more income, what could help people have adequate emergency savings?
“Having three months’ worth of salary saved may sound like a large amount, but it can be built over time. For example, first aim to cover your fixed expenses for one month with your savings. Then gradually start building it up from there,” says Bridgette Kruger, Standard Bank’s Head of Private Banking in SA.
Kruger adds that Standard Bank’s UCount programme provide a helpful option that enables customers to use their UCount Rewards Points to make monthly deposits into their savings account and withdraw that money whenever they need to.
“We’ve designed Standard Bank Prestige to provide smart value banking, assisting consumers in managing all aspects of their financial needs. Prestige clients have access to both a banker and a professional financial planner, who we see as critical partners to our clients on their money management & wealth building journeys,” adds Kruger.
From unlimited call numbers offered by the Bank’s virtual mobile operator, SB Connect, plus free data bundles for Prestige clients who take up a SB connect package to several lifestyle benefits that come with the Prestige Titanium Mastercard credit card, and rewards offered through UCount, Standard Bank has built the Prestige smart value banking proposition to help customers save some money on everyday expenses.
“We also offer affordable, high-quality healthcare through our Unu Health smart app, everything is intended to help consumers free up disposable income, enabling them to begin their savings journey,” adds Kruger.
Jooste emphasizes that Standard Bank’s insights highlight the need for consumers to reconsider their current savings behaviour. She says Standard Bank is constantly innovating to find tools that cater to consumers’ immediate needs while promoting healthy savings habits over the long term.
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