National Savings Month: Why debt is stopping South Africans from saving

National Savings Month often brings renewed focus to budgeting, emergency funds and long-term financial planning. But for many South Africans, the reality is far less straightforward.

Before they can think about putting money away for the future, many are simply trying to make it through the month.

The National Debt Counselling Association (NDCA) says the conversation around saving should recognise that not everyone is starting from the same financial position.

While some consumers have room in their budgets to save, many others are contending with rising living costs, debt repayments and essential monthly expenses that leave little or nothing behind.

Research referenced by the association suggests that the biggest obstacle for many households isn’t a lack of financial discipline or motivationit’s limited disposable income.

NDCA chairperson René Moonsamy says consumers generally fall into three groups: those who choose not to save despite having the means, those who could save but prioritise other spending, and those who simply cannot save because every rand is already committed.

“Some people don’t save for behavioural reasons, some because of their lifestyle priorities and some because they can’t afford to. Providing information and advice on the importance of savings might help the first two groups, but not the third. Unlike poor savings habits, which can be improved by changing behaviour or spending priorities, this group suffers from a structural affordability problem that cannot be solved by encouraging them to save more.”

When the budget simply doesn’t stretch

According to the association, the challenge often stems from negative cash flow, where income is outweighed by unavoidable expenses such as rent or bond repayments, transport costs, insurance, school fees, municipal accounts and debt instalments.

When that happens, emergency savings are usually one of the first things to disappear. A car breakdown, unexpected medical bill or urgent home repair often ends up being paid for with credit, creating even more pressure on already strained household budgets.

“Emergency savings are one of the foundations of financial resilience, but if debt repayments are absorbing most of your disposable income every month, it becomes extremely difficult to build that safety net.”

The NDCA says consumers should still take time to review their bank statements and identify recurring expenses or subscriptions that may no longer be necessary. Even relatively small monthly savings can make a noticeable difference over time, whether by reducing debt faster or creating the foundation for an emergency fund.

When cutting back is no longer enough

Moonsamy says there comes a point where trimming spending delivers diminishing returns. If most of a household’s income is already tied up in essential expenses and debt repayments, the focus should shift towards restoring affordability rather than finding more places to cut.

That could include restructuring debt through a consolidation loan, negotiating revised repayment arrangements with creditors or applying for debt counselling.

“Attempting to build savings while relying on expensive credit to cover everyday living expenses leaves consumers trapped in a cycle of borrowing to make ends meet. That’s when more fundamental interventions, including debt counselling, can help.”

The association says registered debt counsellors assess an individual’s financial position before developing a structured repayment plan that allows consumers to meet their obligations more affordably while protecting their legal rights.

Although some consumers hesitate to seek debt counselling because they view it as admitting failure, Moonsamy says asking for help early is often one of the most responsible financial decisions a person can make.

“In fact, the opposite is true. Seeking help early can prevent financial problems from escalating, protect assets from creditors and lay the foundation for long-term financial recovery. That is a responsible thing to do. Remember, financial resilience is not measured by how much you can save today, but by taking practical steps to put you on a path to a sustainable financial future.”

As National Savings Month continues, the association says the message for consumers is that financial resilience looks different for every household.

For some, it may mean growing a savings account. For others, the first milestone is breaking the cycle of debt and restoring enough financial breathing room to make saving possible

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Source: National Debt Counselling Association