20 July 2016
Many fans were surprised and some suspected their idols were up to something, and they were right. Nyovest and Thusi were working alongside the Sanlam Group in July for National Savings Month, with the aim of setting more South Africans on the road to a future that is low on debt and high on savings.
Every year we spend large sums of money on financial education but it seems we are falling short of the mark in influencing spending behaviour. And no wonder.
Says Cora Fernandez, chief executive of Sanlam Investments' institutional business, “Consumers are bombarded with two conflicting images – on the one hand, there is hardship, poverty and economic uncertainty, social unrest and, on the other hand, the glamorous lifestyles of the star-studded rich and famous. How do we respond? In the former, we join the disconnected voices and in the latter, we hit the malls to get the online ‘must-haves' and what we think we need. We increase our debt-fuelled spending habits because we aspire to celebrity lifestyles. This in turn encourages a cycle of indebtedness, fed by an ever-increasing need for instant gratification and social status. Unfortunately, the bad spending becomes a self-fulfilling prophecy of rolling-over debt, with no limits in sight. We need to show that there is a big difference between earning a high salary and being wealthy – it's not how much you earn but what you do with it that counts.”
Sanlam, also the company behind multi-award winning National Savings Month social experiments – the
One Rand Man and the
One Rand Family – knew that for the initiative to succeed, it had to partner with celebrities who truly, authentically believe in the message. And despite their ‘celebrity lifestyles' both stars remain steeped in good old-fashioned money values:
Lack of savings is not a uniquely South African issue. Annamaria Lusardi, the US-based founder and academic director of the
Global Financial Literacy Excellence Centre and chair of the OECD-International Network on Financial Education‘s research committee, says people the world over are persuaded to spend and buy on credit. “The carmakers want us to buy cars. The food industry wants us to buy food. The clothing industry wants us to buy clothes and shoes. Sometimes, even the government wants us to spend. There are very few institutions telling us to save. This is why I think the Sanlam initiative is such a great one. The financial industry is stepping up.”
Lusardi believes changing the narrative around saving is the key to changing behaviour. “Of course consumption is important and we derive much happiness from, say, our coffee in the morning, having the latest iphone or travelling… but we also have to make sure that we are on a stable financial path. This is why we need to empower individuals to live a fulfilling life – one that is fulfilling over the course of a lifetime, not just today.”
She says the global trend towards poor savings can be linked in part to easy access to credit. “I've seen this in many countries, Italy where I come from, that previously had a very high savings rate. The savings rate was around 20% in Italy in the 1980s, but this figure decreased at around the time access to credit increased. We don't just need access to credit and financial products, we also need financial education, so that people can make the best financial decisions for themselves, those that fit their needs.”
Fernandez says that each year during National Savings Month, South Africans are urged to focus on taking care of their finances by getting out of debilitating debt, setting up a monthly budget and saving for things rather than taking on more credit. But the mission to teach South Africans to spend less and invest more is a tough one, and it cannot succeed if it only receives attention once a year.
“To enable people to live their best possible lives we need to go beyond the way we talk about money to the way financial products are structured, and how and when we educate individuals about savings and investing. Making sure products talk to younger, tech-savvy generations is critical.” Products that keep them engaged and interested, not just in the finances but also the economy, in general, and how local and offshore macro-economic events impact on their savings and investments.
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For more about this National Savings Month social experiment visit