A TymeBank survey shows that tough economic conditions have not deterred young people from putting money away for rainy days, especially women under 35.
The study, based on an online survey of 1 475 consumers, mostly TymeBank customers, indicates that 83% of respondents say they save money. Savings amounts range from fixedbus deposits of R10 000 to R4-million. On average, a young person earns an estimated salary of R12 000 per month or R144 000 a year.
However, this must cover housing, food, transport, data, and, potentially, assistance for family members.
And yet, insights from TymeBank’s depositor base reveal that among the 26- to 35-year-old cohort, just under 40% use a fixed deposit, along with 29% of those aged 16 to 25.
Greg Illgner, chief strategy officer at TymeBank, said the fact that those under 35 are saving the most was extremely encouraging.
“Starting early can make a significant difference to the amount you accumulate, given the power of compound interest,” Illgner said.
He said the findings showed that despite the economic headwinds, consumers were being diligent about saving what they could afford.
South Africans are often said to be resilient in the face of adversity, he said.
Interestingly, said Illgner, the majority of TymeBank customers who were using fixed deposits were female, who accounted for approximately 54%.
The bank speculates that this could be due to several reasons, including that more than 40% of SA women are single mothers, looking to grow money for their children’s education.
Single mothers also need to rely on their own income for everything a family needs, both in the short and long term, according to TymeBank.
Also, women tend to live longer than men, so they need to plan for a longer period after retirement. “This then also explains why more women tend to be worried about their savings strategies and plan better for their financial futures.”
In terms of smart savings strategies, almost a quarter (23%) of respondents consistently save a portion of their income each month. Another 60% of respondents saved whenever they had extra cash.
“The disciplined savers who set aside a regular percentage of their income every month deserve a shout-out for following the successful ‘pay yourself first’ savings strategy,” said Illgner.
Laura du Preez, editor of Smart About Money, a consumer financial education website linked to the Association of Savings and Investment South Africa, agrees. “As South Africans, we are often told we have a terrible savings rate, but many of us are saving, just possibly not enough,” Du Preez said.
She said, however, that it was encouraging that savings pockets appeared to be making a difference, especially among the digitally savvy under-35s.
Up to 44% of those polled said they were saving for an emergency, which was prudent. Education followed at 17%, everyday expenses at 16%, and 14% were saving for a large purchase like a car. Only 5% were saving for retirement.
She said that having an emergency fund was key. “It provides financial relief when life happens: the geyser bursts, you need sudden dental work, or your car needs new parts”.
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