When the pandemic hit, did you have a plan for your finances, especially knowing that you could lose your job or have your salary cut? Or did you continue spending thinking you’ll always have money in the bank? It seems more of you did the former. The South African Reserve Bank found that more people are saving instead of spending their money due to the uncertainty brought on by the pandemic. This is unusual given South Africans’ usually lackadaisical attitude towards savings.
One analyst pointed out that, with the prospect of growing unemployment and a shrinking economy, South Africans who could afford to save, did exactly that. The data showed that savings increased by 3.36 percentage points from February last year to February 2021. In 2020, gross savings by households was 2% of GDP, compared with 1.2% in 2019. The Reserve Bank significantly cutting interest rates last year also didn’t change the fact that people saved more (when interest rates are low, people have more buying power and tend to spend more and save less). Well done guys. It’s tough to do, but ultimately the right thing.
This article appeared as part of The Wrap, 15 April 2021. Sign up to receive our weekly updates