Earned Wage Access Is Key To Helping South Africans Save This National Savings Month
July is National Savings Month in South Africa. The annual campaign aims to communicate the importance of saving, encouraging a culture of saving, and creating awareness of ways in which South Africans can save more effectively.
Historically, South Africans have struggled with saving. Our household savings rate has been largely negative over the past two decades, and currently sits at -1%. Our national savings rate of around 15% of GDP is well below the world average of 28%.
The advantages of having and following a savings plan are significant. Building up savings creates a financial cushion for households, enabling them to handle unforeseen expenses and work towards long-term objectives like purchasing a home, funding education, or preparing for retirement. Financial stability, characterised by having enough savings to deal with emergencies and meet investment targets, lowers stress and worry about money, resulting in improved overall mental and physical well-being.
The importance of having and sticking to a savings plan cannot be overstated. Having savings can also reduce reliance on credit, lowering the risk of falling into debt traps and it can also help pay off existing debts faster. It is particularly difficult to save if you are suffering under the weight of debt or loan repayments. In the past, South Africans who weren’t able to make ends meet before receiving their month-end paycheques would often fall victim to unscrupulous lenders offering loans at exorbitant rates.
Denise Neethling, Head of Marketing at Earned Wage Access (EWA) platform, Paymenow, says, “This situation has been eased with the introduction of EWA – a financial technology that allows employees to access their earned wages before their regular pay cycle. EWA is beneficial for employees who need access to their already earned wages before month end – an ever-more common situation in an economic environment marked by persistent cost-of-living increases.”
“As more employers and employees are taking advantage of the benefits offered by EWA, we are becoming increasingly aware of the crucial importance of enabling South Africans to save more effectively, not just for retirement but for emergencies and medium-term goals.”
Paymenow’s research into its usage patterns shows that twice as many users have already started their savings journey with as little as R200 a month. Further stats show that women are more likely to save and not withdraw their savings than men, and older users (26 – 60 years) are more likely to save than younger users.
To make saving easier and more effective for its users, Paymenow has partnered with Franc, a globally recognised investment platform. Paymenow’s salary-linked savings feature allows users to save money directly from their available earned wage balance into a market-leading interest bearing Money Market account.
Neethling says that there are many benefits to EWA such as reducing financial stress and are workers are less likely to have to resort to expensive loans as a result of cash issues. According to a recent impact report, Paymenow users feel more in control and less stressed about their finances. Crucially, four in five Paymenow customers reported that their ability to save had improved, and 92% of customers would have had to borrow money if they hadn’t had support from Paymenow.
Neethling concludes, “EWA is transforming the financial landscape for many South Africans. By providing access to earned wages before the end of the month, we are empowering employees to better manage their finances, avoid high-interest debt, and build a culture of saving. This aligns perfectly with the goals of National Savings Month, as it gives people a practical tool to save more effectively and avoid financial pitfalls.”