In today’s world, knowledge is the key to financial success. A recent study by Nedbank revealed that South Africa’s youth are showing commendable improvement in their commitment to saving. However, there is a pressing need for improved financial information and transparent guidance to help them achieve the outcomes they desire.
Vanesha Palani, Executive of Financial Management at Nedbank, says, “Our research indicates that 68% of young adults are now saving on a monthly basis, with an additional 7% saving weekly.” Palani adds, “However, a full 78% of survey participants expressed a desire for more comprehensive knowledge on ways to grow their money.”
According to Palani, the guidance specifically mentioned by respondents covers a vast array of requirements, but the highest number of young savers want transparent information on returns and costs, personalized advice, and detailed insights into different savings products and their functionalities.
Palani underscores the urgency of meeting these informational needs, stating, “If our young adults are actively seeking more information and transparency to make the right savings decisions, we have a responsibility to provide that to them.” She adds, “So that our country can finally begin to build the savings culture that has been missing from SA society for so long.”
This is especially true given the research findings that show that 90% of young South African adults opt for savings accounts. This indicates that there remains a healthy appreciation for saving among the youth. Additionally, 89% of respondents make use of some form of informal savings method, such as grocery vouchers, stamps for end-of-year expenses, participating in stokvels, storing cash at home, or keeping money in a transactional bank account.
Palani explains that while many of the young people who participated in the Nedbank survey demonstrate a surprisingly conservative approach to saving and investment, many also display more of a sense of adventure than is often seen in older generations of savers. She points out, “Around 75% of respondents prefer direct investments over safer options like unit trusts,” and adds, “other popular investment avenues include cryptocurrencies, assets for resale, rental property, and independent share and forex trading making up the remainder.”
However, while the savings focus of the youth is heartening, Palani stresses the need for guidance. From her findings, she observed that short-term savings goals are predominant. Little focus is placed on retirement planning or investment, despite the urgency to start as young as possible.
There are also several key barriers to entry identified by many participants in the research, including perceived low interest rates offered by formal savings accounts, insufficient information about available products, and high costs.
The research also reveals that factors like reward points for saving, personalized saving and investment advice, banking fee discounts, and goal-oriented apps and tools influence the saving behavior of young people and inform their choice of products and service providers. Unsurprisingly, digital channels are very popular enablers of saving and investment among young adults. Fifty-one percent of youth use apps, and 16% use electronic banking as their primary means of saving.
Against this backdrop, Palani reaffirms Nedbank’s commitment to not only recognizing the needs, preferences, and challenges of South Africa’s youth but also providing them with tailored solutions that prioritize savings. She recommends Nedbank JustInvest, which has a low minimum deposit requirement, 24-hour access to funds, no monthly fees, and returns of up to 8.75%.
She cites the range of savings and investment solutions available through Nedbank as proof of this commitment. For example, the Nedbank JustInvest offering has a low minimum deposit requirement of R500, 24-hour access to funds, no monthly fees, and compelling returns upwards of 8.75%. Through their solutions, Nedbank is helping to nurture financially informed young South Africans.