Standard Bank has warned that many South Africans earning over R25,000 struggle to build emergency cash savings.

According to Standard Bank data, more than half (52%) of entry-level private banking clients have less than one month of their salary saved in immediately accessible cash savings, available in the event of unforeseen circumstances such as retrenchments or urgent medical procedures.

The bank pointed to the tough economic conditions and high cost of living as the primary reason for this trend.

Without savings, many have had to resort to debt, eroding their ability to build wealth over the long term.

Standard Bank conducted an analysis comparing the cash savings accessible within 24 hours for both Prestige and entry-level Private Banking clients to their monthly salaries and fixed expenses.

Among Standard Bank’s Prestige client base, which consists of individuals earning between R25,000 and R58,000 a month, nearly one in three (29%) had no accessible emergency savings.

In the higher income bracket, individuals earning between R700,000 and R1 million annually, over a third had no emergency savings, with 45% having savings that would last less than a month.

“The data shows that the ability to build adequate cash saving for use in an emergency is not only dependent on earning a higher income,”, said Doret Jooste, Head of Money Management and Advisory at Standard Bank.

“Having cash savings on hand is the cornerstone of healthy money management and likely the most important thing to prioritise when you want to start building your wealth”, Jooste added.

It’s important to have emergency savings to avoid taking unnecessary and expensive short-term debt when you have an urgent expense.

It also helps you stay on track with your long-term investment goals, such as saving for your kids’ education or retirement.

Source: TRADE FINANCE