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By unknown | Jul 09, 2009 | COMMENTS [ 0 ]

SOUTH Africans have to make choices because they cannot go on living in debt and not save for tomorrow.

SOUTH Africans have to make choices because they cannot go on living in debt and not save for tomorrow.

This is the view of Old Mutual, which was involved in the launch this week of National Savings Month by the SA Savings Institute.

"We have to use the momentum around the launch of National Savings Month (July) to inspire South Africans to save and build up their own wealth through disciplined financial behaviour," said Old Mutual director of corporate affairs Crispin Sonn.

"Over-indebtedness, insufficient retirement savings and poor financial education should jolt South Africans into action if the country is to fund its investment and growth," he said.

Sonn said statistics told a sobering story.

About 2000 houses and 6000 cars were being repossessed every month.

The average percentage of debt-to-income peaked at 79,2percent and there were about 80000 judgments for debt a month.

Sonn said poor financial habits were at the root of poor money management.

"So the emphasis should be on changing behavioural patterns by assisting consumers to start new habits and break old ones - especially in an environment where more people are considerably better off today than they were five years ago."

He said skills and capacity building were important, with financial literacy being a priority.

"In order to do business successfully in South Africa, we require a healthy and conducive economy, which in turn is reliant on a financially astute society.

"Saving is important for economic growth, but growth is also important for saving," Sonn said, adding that policy responses should not only focus on savings but on other drivers of growth as well.

There should be a concerted and collaborative effort by business, government, labour and other interested stakeholders to mobilise and grow the nation's savings.

"Increasingly, South Africans are introduced to the realities of spending, saving and finance at a younger age.

"Yet we do not have a well- coordinated and coherent financial education programme to help consumers manage their finances better," Sonn said.

He said many young people took jobs with salaries far higher than their parents earned.

"They then begin to live a lifestyle they believe fits that income. Many realise too late that what the previous generation have is the result of assets accumulated over many years," he said. - Sapa


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