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HOW TO APPROACH FINANCES IN A ZERO-GROWTH ECONOMY

The zero-growth economy, as forecast by the South African Reserve Bank, is likely to result in further strain on everyone’s finances, with some running the risk of prioritising wants over needs.

These can vary from selling a home and temporarily moving in with parents in order to afford luxuries or canceling essential insurance. While National Savings Month is a time to reflect on investing and developing savings goals, it is also an important opportunity to inform and empower South Africans on issues such as structuring personal budgets during times of financial stress. The question many consumers ask is: who has the means to save when times are tough?


As part of a National Savings Month experiment, Sanlam challenged Pearl Thusi and Cassper Nyovest to rein in their VIP lifestyles. They traded imprudent public spending for noticeable saving to encourage South Africans to live within their means.

According to Preenay Sathu, FNB Financial Advisory Channel Head, the financial plan you put in place during the good times should help you during the hard times as well. When it comes to money management you should always adopt a holistic approach with firm emphasis on your individual needs and goals. Adopt a goal-based financial planning approach to help you identify, articulate and prioritise your goals. This is then followed by an outcome-based investment strategy to help you achieve your stated financial goals over a specific time horizon.

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“By clearly understanding the difference between your financial responsibilities, needs and wants you can build a picture of how to budget appropriately and where to allocate discretionary or surplus income in relation to each defined responsibility, need and want. Sometimes this takes some serious introspection, but being honest with yourself is the cornerstone of ensuring that your approach to money management is rational and realistic.”

– FNB Financial Advisory Channel Head, Preenay Sathu

The reality is that people often tend to prioritise saving for a ‘want’ as opposed to a ‘need’ or ‘responsibility’. Resisting instant gratification, the fulfilment that comes with achieving a goal is much more rewarding.

“It is not only important that we give sound guidance but also hold a mirror up to clients as a way of helping them to take responsibility for their financial decisions.”

– FNB Financial Advisory Channel Head, Preenay Sathu

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South Africa’s low savings culture is not only a reflection of the wide socio-economic gap between rich and poor, but it is also attributable to the skewed focus on status.

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“We see this in the cars people choose to buy, the homes and the areas they choose to live in as well as in the savings opportunities they squander in favour of brands and luxury products. There is no time like the present to pay closer attention to your personal finances in order to survive the tough road ahead.”

– FNB Financial Advisory Channel Head, Preenay Sathu

How we see others spending can affect how we save. We are bombarded with images of conspicuous spending daily. The truth is, few of us can afford the glamorous lifestyles full of stylish swag we see projected in every newspaper, magazine, social feed and movie. But we still try. If we live beyond our means, we’ll never have enough money to really afford the lifestyle we aspire to.

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