An empirical assessment of financial prudence among South African individuals: investigating savings and investment behaviour

Siphelele Rulashe, Syden Mishi, Sibanisezwe Khumalo and Desiree Hunter
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Siphelele Rulashe: University of Fort Hare
Syden Mishi: Nelson Mandela University
Sibanisezwe Khumalo: Rhodes University
Desiree Hunter: University of Fort Hare

International Journal of Research in Business and Social Science (2147-4478), 2025, vol. 14, issue 3, 265-280

Abstract: This study provides an empirical assessment of financial prudence among South African individuals, focusing on savings and investment behaviour. Prior research highlights a positive correlation between national savings rates and economic growth, with countries exhibiting high saving rates often experiencing stronger economic prosperity. However, as of 2023, South Africa's gross saving rate remains around 17%, ranking the lowest among BRICS nations. In contrast, countries like China and India boast saving rates above 40% and 30% respectively, underscoring South Africa's persistent challenge in fostering a robust savings culture. Despite various initiatives aimed at increasing the national savings rate, these efforts have yet to yield significant improvements. This research explores whether financial prudence characterised by conservative spending and careful planning in the face of future income uncertainty—could contribute to higher personal savings rates. To investigate this, an experimental design was employed where participants were presented with a hypothetical lottery payout scenario to gauge their prudence and its effect on saving behaviour. Analysis of the data indicated that while individuals generally displayed a lack of prudence, prudence itself has a notable influence on savings. Based on these findings, the study recommends that financial products and services in South Africa be designed to be affordable, accessible, and suited to the needs of the population. Additionally, it advocates for government investment in small businesses, job creation, and efforts to attract foreign investment to support a more robust savings culture. Key Words:Economic Growth, Consumer Spending, Gross Savings Rate, Income Uncertainty, Public Savings

Date: 2025
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