Young people advised to save more for the future

While saving for long-term can sometimes be a difficult task to undertake, one financial expert says it all takes action.

The Executive Head of South Africa’s largest debt management company, DebtBusters, says starting with the lowest amount of money one can afford will make a difference.

Benay Sager advices young people to save whatever they can.

According to research, South African consumers spend 68% of take-home pay to service debt. The DebtBusters’ study reveals that while there is surprisingly consistent spending across all income bands on transport, utilities, and cellphones, there is a difference on how people spend on accommodation, groceries and insurance.

Sager says despite the odds facing South Africans who are trying to stay afloat in these tough economic times, more work need to be done to educate them about the benefits and importance of long-term savings.

The study also reveals that while upper-middle-income South Africans who earn more than R420 000 or R35 000 or more, have a more stable income, they have the highest debt.

“These income earners have a total debt to annual net income ratio of 187%, and they need 74% of their take-home pay every month to service their debt repayments,” says Sager.

He says people need to find ways to service their debt.

He also urges the public no to take credit if they won’t be able to pay it back.

For those who have no access to retirement funds or their companies don’t offer those benefits, Sager says they should look at getting their own retirement annuity.

He says starting investing early in life is one of the wisest decisions one can ever make.