• Standard Bank has shared some concerning data about the capability of South Africans to save.
• The financial institution notes that 29 percent of its emerging private banking clients do not have emergency savings.
• Building up emergency savings is critical to long-term financial planning, it adds.

You don’t have to be financial adviser to know that South Africans are struggling to put food on the table, fuel in their cars, or pay off their bonds. Quite frankly, the astronomical rise in the cost of living has made life untenable for many, and new data shared by Standard Bank highlights just how difficult long-term financial planning is.

The financial institution this week shared information regarding its emerging high-profile customers.

More specifically its entry-level private banking clients and their emergency savings, or rather the lack thereof.

Here Standard Bank shared that 52 percent of its entry-level private banking clients have less than one month of their salary saved in immediately accessible cash savings, which would be used in the event of unforeseen circumstances such as retrenchments or urgent medical procedures.

Without the emergency savings, the financial institution says that many have had to resort to debt creating loans or other methods of accessing funds quickly, which erodes their ability to start building wealth over the long term.

“In its analysis Standard Bank compared the value of cash savings (accessible within 24 hours) in the Prestige and entry-level Private Banking client bases, to their monthly salaries and fixed expenses. Of Standard Bank’s Prestige client base – those earning between R25,000 and R58,000 a month – nearly one in three (29%) had no accessible emergency savings,” the Bank highlighted.

“In the higher income bracket, individuals earning between R700,000 and R1 million annually, over a third had no emergency savings at all, with 45% having savings that would last less than a month,” it added in a release shared with Hypertext.

Unpacking the importance of emergency savings, Doret Jooste, head of Money Management and Advisory at Standard Bank, says that it, “helps you avoid taking unnecessary and usually expensive short-term debt when you need to cover an urgent expense.”

“It also helps you stick to your plan when investing for the longer-term goals, such as for your kids’ education or retirement.  Instead of having to divert your longer-term investments to cover unexpected expenses that pop up in the short run, accessible emergency savings allow you to stick to your financial goals and long-term plan to realise important goals and build wealth,” she continued.

With the current financial strain being felt by many South Africans well documented at this stage, the experts at Standard Bank have shared some effective ways to help build up emergency savings.

“Having three months’ worth of salary saved may sound like a large amount, but it can be built over time. For example, first aim to cover your fixed expenses for one month with your savings. Then gradually start building it up from there,” advised Bridgette Kruger, Standard Bank’s head of Private Banking in SA.

Kruger also pointed to the value-added services and rewards programmes that many banks in SA offer as something that customers should look to leverage. When it comes to Standard Bank, the UCount programme is said to provide a helpful option that enables customers to use their UCount Rewards Points to make monthly deposits into their savings account and withdraw that money whenever they need to.

“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 we see as critical partners to our clients on their money management & wealth building journeys,” Kruger explained.

“We also offer affordable, high-quality healthcare through our Unu Health smart app, everything is intended to help consumers free up disposable income, enabling them to begin their savings journey,” she concluded.

With the current stark financial outlook continuing to look grim, it seems like South Africans need to actively look at any benefits that their banks may offer as a way to build up their emergency savings over time, especially as mounting short-term debt is a killer.

[Image – Photo by Towfiqu barbhuiya on Unsplash]