The rising pressure caused by increasing prices and an ailing economy are leading many South African households to struggle financially.
According to a recent survey of South African households, the rising pressure caused by increasing prices and an ailing economy are leading many to struggle financially. The result is that a large number are having to work two jobs to support their lifestyles and pay off existing debts.
The Old Mutual Savings Investment Monitor, which tracks the shifts in the financial attitudes and behaviours of working people across South Africa, found that many individuals are not earning enough from their primary employment and are finding other sources of income to make up the shortfall.
Of those who have found additional employment to help them get by, 13 percent have a job similar to the work they do every day, while 24 percent have found something completely different to help them get by. However, while this may paint a bleak picture for many South Africans, 63 percent of respondents said they were actually enjoying having more than one job.
Unable to plan for unexpected expenses
The fact that more households are feeling the financial strain means that even with second incomes, many are just getting by and are unable to save for the future. The trouble then comes when costs above and beyond the usual monthly expenses, such as repairs to boilers and cars that breakdown, can cause real issues.
Of the 1,000 households canvassed, 50 percent said they would be unable to find even R1,000 to cover an unforeseen expense, while a quarter said an expense of R5,000 would be more than they could afford to pay. If they were faced with unforeseen costs, respondents said they would:
- Borrow from family (36 percent)
- Use their savings (30 percent)
- Miss a payment and make it when they can (17 percent)
- Borrow money from a company like Wonga (14 percent)
An impact on long-term financial planning
Another area the research explored is how the current economy is affecting the ability of South African consumers to plan for the future. Worryingly, just 44 percent of working parents said they were currently able to save for their children’s education. That has fallen from 46 percent last year. Among lower earners (those earning less than R6,000 per month), only 29 percent said they were saving to meet the cost of schooling.
Another area that is causing significant concern is the fact that many households are not saving for their retirement. A shocking 40 percent of the respondents said they have no savings in place for their retirement at all. That includes retirement annuities and pension funds.
While the current financial reality for many South Africans looks quite bleak, many are being resourceful and raising their income in an innovative range of ways. However, the latest survey also shows a distinct lack of financial planning. If that situation does not improve then things will only get worse in the future.