Unsplash 
Much like Ariana Grande sings in her song, 7 rings, it’s a mindset of “I want it, I got it”. And that’s one of the biggest reasons why SA has one of the lowest savings rates in the world – in the first quarter of 2025, our savings rate was a negative 1.20%, which in a nutshell, means we’re spending way more than we should. South Africa's household savings rate has been negative since the end of 2022.
In a recent broadcast of The African Boardroom with Khaya Dlanga, Sisandile Nkatu, Head of Retail Investments at Nedbank chatted candidly about some of the reasons why South Africans are less inclined to save and how it’s never too late to make a change.
“The harsh reality is that most South Africans are not ready to retire, even at retirement age.”
“I think we get quite comfortable with getting a salary on the 25th or the 1st or the 15th day of the month and we kind of forget that the road is going to run out at some point,” Sisandile said.
In a thought-provoking and meaningful conversation with Dlanga, she highlighted several simple savings strategies that can be implemented to kickstart or added to a retirement savings plan.
[embed]
Psychology of saving
“The psychology of saving is a mindset of paying your future self and delaying gratification,” she said, adding that it’s never too late to change your mindset about your money – giving up the champagne bottle for an investment where your money works for you while you are sleeping.
Financial fitness
In a culture where being fit and active is incorporated into daily life, that attitude can be extrapolated to your money.
“I know some very good looking 55-year-olds who are in the gym regularly. Why not align that with being money fit?”
Nedbank has some of the best market rates when it comes to fixed deposits, ranging from one month terms to 60 months with interest rates up to 10.5%,” she pointed out.
Assess your risk appetite
The level of risk you assume in your investment strategy will depend on your individual risk profile, but your risk appetite also has some correlation to your life stage. “Your investment strategy will depend on both your personal risk appetite and your life stage. Generally, people may be more comfortable taking slightly more investment risk when they are younger, and tend to shift to more secure investment options as they approach retirement. You want to put your money in an instrument where it’s going to grow and there’s little to no chance of your capital being reduced,” she advised.
“Find the right saving and/investment product for you.”
Suitable products could include a fixed deposit account where your money earns steady growth. Nkatu points out that you can put away a minimum of R1 000 in a fixed deposit and simply reinvest the money at the end of the investment term to benefit from compound interest.
A financial legacy
Most retirees would like to leave something behind for the next generation.
“Do you want to leave a bill or a will?”
As Nkatu noted, her own mother is keen to leave a legacy for her grandchild. One of the best legacies to leave your children is the legacy of not having to financially provide for you in your retirement. The South African reality is one of a growing “sandwich generation”, who are financially stretched to the limit providing for their parents in retirement, running their own households and raising children. Changing the pattern means being disciplined enough to
The 50/30/20 rule
One of the keys to successful saving is successful budgeting and Nkatu recommends the 50/30/20 rule – where 50% of your earnings goes to your basic needs (house, food, regular bills); 30% goes to your wants and 20% to your savings.
“Everyone has that one thing they want. Maybe for you, its expensive sneakers, for someone else it might be travel or it might even be big windows in your home. But if it is at the cost of your savings, is it really worth it?”
Part of the trick to saving is making a decision now that will pay off in the future, rather than living in the now and paying off the cost for your future self to deal with. And that means being disciplined when it comes to setting aside 20% for your savings, and resisting the temptation to shift some of those funds to present-day wants.
This could look like making a balanced choice, for example, buying a slightly less expensive sneaker or putting in smaller windows when you are renovating.
The power of compound interest
Compound interest is frequently referred to as the eighth wonder of the world. It means that interest being calculated at regular intervals and then being added to the principal amount, to earn interest upon interest.
“The best time to plant a tree was 25 years ago, the next best time is today. So, if you start saving now, in 15 years’ time, consider the amount of money you will have saved. Money chilling in your cheque account is losing value and under your mattress – is even worse. R100 today is not R100 tomorrow and definitely not in five years.”
For example, if interest is calculated and paid daily, and using the example of R1,000 in a savings account that pays 10% interest, you will start by earning 28c interest per day. So, on day two your account balance will be R1,000.28.
Assuming interest capitalised daily, at the end of 10 years – R1 000 at 10% will earn R2 005,36 in interest. The total account balance will be approximately R3 004,54. The daily interest at the end of year 1 will be 30c and at the end of year 10 it will be 82c.
Purposeful savings and conscious spending
Automate your savings, so that you take out the cognitive engagement factor and pay yourself first. Various savings vehicle include tax-free savings accounts where you can deposit up to R36 000 a year and whatever you earn comes out tax-free. Another option is a fixed deposit like the Nedbank Optimum Plus account, where your capital is guaranteed, meaning you will never get back less than what you put in, and your savings earn a predictable return over the investment term.
“As long as you don’t have a plan for your money, it’s going to be spent. Focus on reducing short-term, high-interest debt, as this frees up more money for saving — while recognising that some long-term debt, like a home loan, can be considered productive or good debt."
Start physically making a note every time you spend money – this automatically makes you more conscious of where your money is going.
“The mental accounting when it comes to your budget doesn’t work. Use a spreadsheet or an app, write it down or track it in your bank statement so you know where your money is going.”
My Smart Money is a money management tool you can see how much money still needs to go off your account versus the balance in your account, you can see your credit score, and get tips to improve your credit.
“Money is such a serious thing that needs to be demystified as much as possible. Make it a habit to know how much is in your account and develop that savings mindset,” Nkatu concluded. DM