RATIONAL AND IRRATIONAL INDICATORS OF FINANCIAL EFFICACY AND DESIRABLE SAVINGS BEHAVIOUR AMONG EAST LONDON LOW-INCOME CONSUMERS

Year 2018, Volume: 10 Issue: 2, 0 - 0, 31.12.2018

Sibanisezwe Alwyn Khumalo Nobukhosi Dlodlo

Abstract

Since the principal source of retirement income is savings, the significance of
projecting desirable savings behaviour during the pre-retirement phase can never
be overestimated. Notably, the majority of low-income consumers in South Africa
are not sufficiently prepared for retirement. This provides fertile ground for
clarifying the importance of positive long-term savings behaviour. This study
aimed to present a composite view by delineating both rational and irrational
markers of financial efficacy and self-reported savings behaviour, whilst
simultaneously discussing how such determinants can be predisposed towards
increasing an individual’s retirement savings rate. Procedural techniques in the
form of multiple regression analysis quantified the impact of financial risk
tolerance, perceived income adequacy and social norms influence on individuals’
efficacy towards long-term savings behaviour. The findings of this study have
practical implications for financial advisors, on how increased financial needs
awareness amongst low-income consumers regarding future retirement life may
be generated. Furthermore, this paper contributes towards the development of
thriving communities by proffering knowledge on enhancing resource utilisation
in lieu of increasing long-term financial security among low-income households. 

Keywords

Retirement, financial efficacy, low-income consumers, savings behaviour.

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