South Africans are strug­gling – but they’re sav­ing, too

If you rate your level of fi­nan­cial stress as “over­whelm­ing” or “high”, you’re part of the two-thirds of the pop­u­la­tion feel­ing that way. You may be en­cour­aged to know that oth­ers are also cut­ting their costs and their spend­ing. An­gelique Ardé re­ports

Weekend Argus (Saturday Edition) - - PERSONALFINANCE -

The find­ings of the lat­est Old Mu­tual Savings & In­vest­ment Mon­i­tor, which was re­leased this week, make for sober read­ing. As a sur­vey of the fi­nan­cial at­ti­tudes and be­hav­iour of South Africa’s work­ing metropoli­tan pop­u­la­tion, it shows how low we’re all feel­ing about our fi­nances and eco­nomic out­look. But it also shows that while savings lev­els are down, there are those who are man­ag­ing to save more – and not nec­es­sar­ily be­cause they are earn­ing more.

Al­most half of all house­holds say they are sav­ing less than they were a year ago. This is the worst mea­sure since the in­au­gu­ral sur­vey in 2009, which was im­me­di­ately af­ter the 2008 fi­nan­cial cri­sis when 52 per­cent of re­spon­dents claimed to be sav­ing less.

This year, two-thirds of re­spon­dents de­scribed their level of fi­nan­cial stress as “over­whelm­ing” or “high”. Al­most 60 per­cent of re­spon­dents found that, at least once over the past year, their in­come did not cover their liv­ing costs. This was the case for three-quar­ters of re­spon­dents in low­in­come house­holds (monthly in­come of R6 000 or less) and for one-third of those with a house­hold in­come of more than R40 000 a month.

On a more pos­i­tive note, the sur­vey shows that those who are man­ag­ing to save more say they are able to do so be­cause of “good debt man­age­ment” (and the knock-on ef­fect of free­ing up funds that can be saved) and a re­al­i­sa­tion of the im­por­tance of savings.

Among the more wor­ry­ing find­ings of the sur­vey is that al­most half of all moth­ers in South Africa clas­sify them­selves as sin­gle par­ents, with 88 per­cent of them not re­ceiv­ing reg­u­lar fi­nan­cial sup­port from the fa­thers of their chil­dren. And the poorer the house­hold, the more likely it is that it will in­clude a sin­gle mother.

Adding to the bur­den on sin­gle moth­ers is that some are in the “sand­wich gen­er­a­tion”, which means they are also sup­port­ing their par­ents, a si­b­ling, a rel­a­tive or an­other adult.

Nearly 40 per­cent of all re­spon­dents said they had de­pen­dants in ad­di­tion to chil­dren of their own.

Al­most 60 per­cent of re­spon­dents said they ex­pected to sup­port par­ents or rel­a­tives in fu­ture. Since the in­cep­tion of the sur­vey in 2009, this is the high­est per­cent­age of re­spon­dents fac­ing tak­ing on this re­spon­si­bil­ity.

The sur­vey shows that debt lev­els and fi­nan­cial stress are closely linked: 52 per­cent of re­spon­dents who de­scribed their stress lev­els as “over­whelm­ing” said they had too much debt and were bat­tling to man­age it.

There has been an in­crease in the per­cent­age of debt-stressed house­holds that ad­mit to “feel­ing in trou­ble”. A quar­ter of all re­spon­dents in this year’s sur­vey said they had too much debt and were hav­ing trou­ble man­ag­ing it, com­pared to 16 per­cent of re­spon­dents last year.

Re­spon­dents in all in­come bands are less sat­is­fied with their per­sonal fi­nances than they were last year. The sur­vey notes that, to date, the higher in­come bands have been fairly re­silient, but now even they are show­ing signs of strain.

To gain an un­der­stand­ing of just how fi­nan­cially ro­bust work­ing metro house­holds are, and to un­der­stand how they would be­have in the face of a fi­nan­cial emer­gency, re­spon­dents were asked how they would han­dle an un­fore­seen ex­pense of R1 000, then R5 000, ris­ing to R100 000.

This year’s sur­vey shows that all but two per­cent of work­ing house­holds could han­dle an un­fore­seen ex­pense of R1 000. Fifty per­cent would ac­cess savings, nine per­cent would use a credit card and the rest would bor­row from a friend (25 per­cent) or a stokvel (six per­cent). Most (84 per­cent) would not be able to han­dle an un­fore­seen ex­pense of R100 000.

In re­sponse to fi­nan­cial hard­ship, house­holds are try­ing to cut costs by curb­ing spend­ing on lux­u­ries such as travel (88 per­cent) and en­ter­tain­ment ( 86 per­cent). Al­most 80 per­cent of re­spon­dents said they avoided sit­u­a­tions where they might over­spend and 71 per­cent took lunch to work (in­stead of buy­ing it), ac­cord­ing to Lynette Ni­chol­son, the re­search man­ager at Old Mu­tual.

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