How South Africans save money each month

South African consumers are pessimistic about the country’s economy and prospects for wealth in 2016.

This is according to the Credit Suisse Emerging Markets Consumer Survey 2016, which showed that only 4% of respondents based in SA expect their personal finances to improve over the next six months, considerably lower than the 11% last year and well below the survey average of 16%.

The report was compiled by research firm Nielsen, which conducted nearly 16,000 face-to-face interviews across nine emerging economies, including South Africa.

Three in 10 respondents said they had no extra money for saving at the end of each month – this was down from 38% in the prior report, and also below the survey average of 32%.

For those who manage to save, they used the following distribution channels:

  • Bank Account – 60%
  • Life Insurance – 25%
  • Stock market – less than 1%
  • Cash – 28%
  • Mutual Fund – 2.5%
  • State Treasury bill-bond – less than 1%
  • Property – 3.5%

South Africa ranked at the low end of a range of the survey’s indicators with continued disparities between income groups, the report said.

“South African consumers face multiple challenges in 2016, with higher inflation due to severe drought conditions and a weak currency, as well as likely interest rate increases demanding higher shares of already constrained disposable incomes,” Credit Suisse said.

“The prospect of job cuts in the mining industry looms large, and will likely place further pressure on low-income households.”

“Mid- and higher-income households will likely face further interest rate hikes this year and, combined with currency weakness, constrain purchases of higher-end, often imported products.”

Despite general pessimism in the market, high earning South Africans (earning over R30,000 a month) were confident they would see their fortunes increase over the next 6 months – while the poorest (earning less than R3,000 a month) expected wealth to slip away.

Across the board, however, South Africans expect to be hit hard by inflation, with low income expectations and tighter personal finances.

In 2015’s report – during more stable economic times – South Africans reported high spending on internet access and smartphones; however in 2016, alcohol has gained the most spending momentum, with spirits and beer ranked as the top two ‘added expenditure’ items in SA households.

This is followed by internet access and smartphones, followed by holidays, cosmetics and property.

TV and extra education have experienced a decline in spending momentum, the report showed.

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How South Africans save money each month