In the face of challenging economic conditions, many South African consumers are finding it difficult to build emergency cash savings. Recent data from Standard Bank reveals that over half (52%) of entry-level private banking clients have less than one month’s salary saved in accessible cash, which could be crucial in unforeseen circumstances such as retrenchments or urgent medical procedures.
According to the a press release shared with Business Tech Africa by Standard Bank, the lack of savings forces many to rely on debt, undermining their ability to accumulate long-term wealth.
Standard Bank’s analysis compared the cash savings (accessible within 24 hours) of its Prestige and entry-level Private Banking clients to their monthly salaries and fixed expenses. Among the Prestige clients, earning between R25,000 and R58,000 monthly, nearly one-third (29%) had no accessible emergency savings.
The situation is even more concerning in higher income brackets. Among individuals earning between R700,000 and R1 million annually, over a third had no emergency savings, and 45% had savings that would last less than a month.
“The data shows that building adequate cash savings for emergencies is not solely dependent on 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 explains the importance of emergency savings: “Having emergency savings helps you avoid unnecessary and usually expensive short-term debt when you need to cover urgent expenses. It also allows you to stick to your long-term financial plans, such as saving for your children’s education or retirement. Instead of diverting long-term investments to cover unexpected expenses, accessible emergency savings enable you to maintain your financial goals and build wealth.”
So, what can help people build adequate emergency savings if it’s not just about earning more? Bridgette Kruger, Standard Bank’s Head of Private Banking in SA, offers practical advice: “Having three months’ worth of salary saved may sound daunting, but it can be built over time. Start by aiming to cover your fixed expenses for one month with your savings, then gradually build up from there.”
Kruger highlights Standard Bank’s UCount programme as a helpful tool, allowing customers to use their UCount Rewards Points to make monthly deposits into their savings accounts and withdraw the money when needed.
“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 are critical partners on their money management and wealth-building journeys,” adds Kruger.
Standard Bank’s Prestige offering includes various benefits to help customers save on everyday expenses. These include unlimited call numbers through the Bank’s virtual mobile operator, SB Connect, free data bundles for Prestige clients with an SB Connect package, lifestyle benefits from the Prestige Titanium Mastercard credit card, and rewards through UCount. Additionally, affordable, high-quality healthcare is available through the Unu Health smart app, all intended to help consumers free up disposable income and begin their savings journey.
Jooste emphasizes that Standard Bank’s insights highlight the need for consumers to rethink their current savings behaviour. She notes that the bank is continually innovating to find tools that meet consumers’ immediate needs while promoting healthy savings habits over the long term.
Main Image: Standard Bank