Saving for a rainy day isn’t easy, particularly when you’re young and live in a country that has long been renowned as a nation of spenders. With so much economic and political turmoil in recent years, it’s little wonder South African millennials are struggling to amass significant savings, but unless attitudes to savings change, they risk making the same mistakes as their parents by not having the money they need to live comfortably in later life.
The challenges facing South Africa’s millennials
Millennials are a generation born between 1980 and 1994. They currently make up the fastest-growing segment of the workforce. They are increasingly independent and empowered as they can access whatever information they need in seconds online. So why are they so bad when it comes to saving?
Millennials are known for pursuing instant gratification. When they want something, they want it now, and particularly in South Africa, they would rather access credit to make that purchase than save the money they need over time. That debt further hampers their ability to save.
Interestingly, millennials also earn 20 percent less than baby boomers earned at the same age. Today’s 25 to 34-year-olds have approximately half the wealth of the baby boomers. That means they have fewer homes, more student debt and less money to save. Given that many baby boomers are now struggling due to their poor saving habits at working age, millennials will be especially vulnerable unless they start to save.
Only 35 percent of millennials are saving for the long-term
A survey of 2,200 millennials has shed some light on the saving habits of young South Africans, and the results are quite worrying. The research showed that many millennials are not saving at all, with many repeating the same saving mistakes as their parents.
Currently, only 6 percent of South Africans are able to live comfortably in retirement. That situation looks set to continue given that the few millennials who are saving are more concerned with saving towards to the costs of educating their children and leaving an inheritance, rather than investing in their retirement. In fact, almost half of South Africa’s millennials spend more on coffee than on any form of retirement investing.
Many millennials don’t realise that waiting until their 30s or 40s to start saving for their retirement is too late. Ideally, they should be looking to save 10 percent of their earnings from their first job, but if that sounds unachievable then anything that can be saved now is better than nothing.
Making small savings every day is the best way to reduce your expenses to leave you with some money to put away at the end of the month. Online loan provider Wonga South Africa has put together a few tips to get you started.
What are your top saving tips for millennials? How do you save at least some money every month? Please share your thoughts with our readers in the comments below.