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Johannesburg - South Africans must spend money wisely over the festive season and save for next year, the SA Savings Institute (Sasi) said on Wednesday.
"South Africans spend more than they earn throughout the year, and this is compounded over the festive season when we are inundated by marketing and tempted by material goods we desire rather than need," Sasi chairperson Prem Govender said in a statement.
"People in all income brackets give in to debt just to make merry during the festive season."
She said the festive season created celebration pressure.
"This is soon followed by household financial obligations in the new year which people cannot avoid or delay, such as equipping children for school, getting to work, medical expenses, as well as food costs."
Sasi launched a festive season campaign on Wednesday with the theme, "spend wisely, new year ahead".
Govender said the steep rise in the cost of living had left little to save in 2013, and this would continue in 2014.
"The Consumer Financial Vulnerability Index indicates that the pressure on consumers' cash flow remains high. Yet, the celebrations continue and many pay for annual holiday expenses out of long-term savings, annual bonuses or increased credit card debt."
She said South Africa's savings and investment rates, at below 20% of gross domestic product, remained low.
"According to the World Economic Forum, savings in China are at 51%, India is at 32%, while South Africa is at 16.5%."
Sasi CEO Elizabeth Lwanga-Nanziri said people were relying on government or their children to take care of their financial needs.
"People are concerned about where and how they should save, resorting to informal mechanisms as a last resort," she said.
"The big challenge is to get people not only to bank, but to meaningfully engage financially by transacting regularly and using savings vehicles, rather than withdrawing all their money at once."
She said a 2012 FinScope study found that 34% of banked people withdrew their full salary as soon as it was deposited into their accounts.
"Limited knowledge of retirement savings and credit continue to pose a threat to accumulation of household savings. We are however, encouraged by the reforms relating to preservation, tax incentives, and credit amnesty," Lwanga-Nanziri said.
"Fundamentally, consumers need to have an improved understanding of credit, taxes, and savings options to better take care of their financial futures and to not fall into the credit trap."
