An Investigation into Savings Behaviour of Households in Midrand, Johannesburg

Moloko Stephen Makgele and Peter Chikwekwete
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Moloko Stephen Makgele: MANCOSA Graduate School of Business, South Africa
Peter Chikwekwete: MANCOSA Graduate School of Business, South Africa

Expert Journal of Finance, 2019, vol. 7, issue 1, 8-21

Abstract: Saving is a crucial component for the economic health of a country and can act as a shield for international capital movements. Low savings behaviour of households in South Africa and in particular that of Midrand, is of great concern. High levels of unemployment, financial illiteracy and debt, contribute negatively to the level of savings. This research study investigates the savings behaviour of households in the Midrand using quantitative methods from data collected from 191 households which participated in the study. The results revealed that many households in Midrand are not financially literate and have a poor savings culture. The inability to budget and lack of financial planning are some of the factors that hinder households from saving. The study shows that households in Midrand are aware of the importance of saving, despite not saving enough. These households earn higher than the average household in South Africa and are more educated. Poor saving behaviour is a result of financial illiteracy. The study recommends that financial education should be part of the curriculum at schools; programmes by both the private and government sectors should be put in place to educate their employees; withdrawal from pension funds should be strictly monitored; parents should encourage their children to start saving from an early age; tax rebates could be a tool to improve savings, and a compulsory saving platform should be introduced to all people earning an income.

JEL-codes: D14 P46 (search for similar items in EconPapers)
Date: 2019
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