THE recently published Old Mutual Savings Monitor has found that South Africans' household saving as a percentage of disposable income has dropped from 5,4percent in the 80s to 0,28percent over the past decade.

THE recently published Old Mutual Savings Monitor has found that South Africans' household saving as a percentage of disposable income has dropped from 5,4percent in the 80s to 0,28percent over the past decade.

And the trend appears to worsening each year, according to the South African Savings Institute.

Deputy Minister of Finance Nhlanhla Nene confirmed earlier this year that household saving as a percentage of Gross Domestic Product has declined sharply over the last 15 years.

We need to influence consumer behaviour by educating people on how savings affect the South African economy, and them personally. We must focus on behaviour change to help break old habits and start new ones to enable us to achieve our financial aspirations.

So why is it important for the South African economy that we save and how does it affect us as individuals?

The money we save at the local bank is used by the bank to trade, to earn a return on our investment and to make a profit for the bank. One of the stakeholders trading with the bank will be the government. The government pays interest on the money it borrows from the bank, which in turn provides us with interest on our savings.

The government uses the money to improve the infrastructure of the country, for example in preparation for the 2010 Fifa World Cup. So with our savings we are helping the South African economy and we are gaining from it not only by enjoying better amenities, but also through the interest we earn on our savings.

But does savings only include putting money away into savings accounts, policies or investments? Definitely not. Saving includes holding back on spending and using that money to pay off debts faster.

Responsible money management requires a change of habit. In fact, we should try to pay cash for as many of our purchases as possible. Debt is a major obstacle to achieving financial security.

So by paying off our debts we are actually saving. Beware of being caught in a debt spiral. This happens when we live too good a lifestyle, incur debt, clear some of it, but go further into debt again.

According to Old Mutual's research, many respondents feel that in today's society there is no alternative but to get into debt, because we tend to place a lot of value on material things.

By changing our spending habits from buying what we want to buying what we need, we can make a huge difference to our savings patterns.

We will then be able to put a little bit of extra money into paying off our debts - focussing first on accounts with the highest interest rates, such as credit cards and shop cards. Using a debit card to make purchases instead of a credit card will ensure that we don't spend money that we don't have.

Once we have cleared our debt and are working on a cash basis, we will have space to start thinking about investing money for important, longer-term goals, making our money work for us . and not for our creditors.

It often helps to ensure that our savings are automatically deducted through a debit-order from our monthly income at the beginning of the month - before we spend the cash. Eventually it becomes a habit and we won't have to think about putting the money aside each month.

Speak to your financial adviser today about setting up a savings plan within your budget, so that you live within your means today while securing your future and enjoying peace of mind.

l The writer is director of corporate affairs at Old Mutual.