“The youth are the biggest culprits and that’s very scary because they don’t have any money management skills whatsoever and the way they view life is totally different. When you talk about planning for retirement that doesn’t ring a bell for them,” South African Savings Institute (SASI) CEO Elizabeth Lwanga-Nanziri told CNBC Africa on Friday.
“The other category are your middle income earners, many of them are big spenders. Those are the groups of people that are currently earning that should be saving or putting something aside, seeing that they’re almost nearing retirement. It is very discouraging and worrisome.”
Some of the reasons for the high indebtedness among spenders include medical expenses and the rising high cost of living especially in food and petrol prices.
A high dependence on credit to meet their financial demands becomes more frequent as a result of constant spending, which is in turn leading into high debt.
“We see especially single working mothers tend to be good spenders, they’re cautious many because they have kids to worry about. We also have our old-aged group, they manage their finances better. Seeing that they have now lived their time, we should be worrying about the youth and the middle income earners, who should be the people that are supposed to support our system,” Lwanga-Nanziri explained.
The SASI have implemented a number of awareness programmes to provide people with an understanding of basic financial skills, including a varsity savings campaign and a Teach Children to Save campaign, which was launched in July.
“Given that the cost of living is actually going up, the idea is to try and make ends meet with what you have right now, and that is possible if you can try to adjust your mind-set,” said Lwanga-Nanziri.
“The economic situation is not getting better and we have been telling people it’s going to get worse so it’s the mind-set change campaign that we’re actually running at the moment.”