Embattled South Africans are cutting back on saving for education

This is one of the key findings of the recent 2013 Old Mutual Savings and Investment Monitor, which surveys the savings and investment behaviour of working metropolitan households.

Vikash Maharaj, Regional General Manager, Personal Financial Advice, KwaZulu-Natal Region at Old Mutual, says; "The latest findings show that South Africans are increasingly budget conscious and adjusting their spending patterns accordingly. The number of respondents cutting back on expenses has nearly doubled in the last two years, rising to 72% in 2013 from 38% in July 2011."

Of major concern, says Berelowitz, is that the percentage of respondents making use of education policies has decreased dramatically in just a year from 31% in 2012 to 19% in 2013.

Furthermore, he says the percentage of parents with dependent children who are saving for their children's education has decreased each year for the last four years - from 55% of respondents in 2010 to 40% in 2013. "The 2013 result also marks a significant drop from 2012, when approximately 50% of the respondents with dependent children indicated that they were saving for their children's education."

The survey also found that the drop in the incidents of savings for education was apparent across all income levels. These findings are particularly worrisome when coupled with the fact that 38% of respondents had neither a retirement annuity nor a pension or provident fund in place. Almost 40% of respondents said they would rely on their children to take care of them financially in their old age. This figure is up from 26% in 2010. Among people earning less than R 6 000 per month, this figure is even higher: 51%.

"The longer consumers remain tied to short-term debt and its high interest rates, the longer it will be before they can allocate money to long-term savings that build wealth," says Berelowitz.

Interestingly, confidence levels in South African financial institutions remain high and are in fact the highest recorded to date. However, Nicholson points out that overall optimism levels are the lowest measured so far, with only 55% saying they're confident in the SA economy, down from 58% in July 2011.