New data shows how South African consumers’ lifestyles have changed based on their earnings

Millions of South Africans are feeling heightened financial pressures due to the Covid-19 pandemic and lockdown, as well as the recent unrest that unfolded in some of our provinces, says Old Mutual.

The Old Mutual Savings and Investment Monitor (OMSIM) annual research report is a clear indicator of how the habits and behaviours of working metropolitan households are shifting, the financial services firm said.

“There is no doubt that consumers are having to take a much closer look at the way they manage their money and many are having to adapt their lifestyles to survive,” said Lynette Nicholson, head of research at Old Mutual.

To build on the 2021 OMSIM findings, Old Mutual conducted an additional ‘rapid results’ survey in July to assess whether the recent unrest had further eroded people’s sense of wellbeing.

This July survey revealed that people’s confidence in the South African economy dropped a further 3%, to 31%, the lowest level recorded in the history of OMSIM. The percentage of respondents who made emergency funds a priority also went up – from 37% to 40% – over this short period of time.

The research also indicates that although job and income security remain the top financial priorities for 65% of working metropolitans surveyed, they are also prioritising the way they manage their money.

Around 62% of households are cutting expenses where they can, 50% (up 10% from 2020) are prioritising paying off their debts and 37% are now making sure they have enough emergency funds, up from 33% in 2020.

The research also shows that the pain and difficulties of the past 18 months have led to some behavioural shifts that could have negative long-term consequences.

For example, 43% have taken out a personal loan from a financial institution, 25% have cut down on or cancelled car/household insurance or moved to cheaper options, and 20% have cut down on or cancelled medical aid cover or moved to cheaper options.

Indebtedness is likely to continue rising, considering that 54% have dipped into savings to make ends meet; 34% have fallen behind on household bills; 34% have borrowed from family and friends; 31% have cashed in savings/investment policies; 28% have fallen behind on store card payments; 32% have fallen behind on credit card payments; and 19% have fallen behind on rent or home loan payments.

Furthermore, the OMSIM 2021 research shows that one in three (34%) respondents do not have enough savings to last more than a month (at most) if they lost their income/jobs.

To add to the concerning state of people’s financial situations and the high or overwhelming financial stress experienced by 56%, there is also a continuation of multi-generational dependency, Old Mutual said.

“With all the uncertainty we have experienced over the past year, one thing is certain and that is that there has never been a more important time than now to take control of your finances, get expert financial advice and plan carefully for today, tomorrow and your long-term future,” said Nicholson.

Read: Here’s how many South Africans will struggle to survive a one month financial emergency

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New data shows how South African consumers’ lifestyles have changed based on their earnings