This is what stressed-out South Africans are willing to sacrifice to cut costs

South African consumers are under extreme financial stress, with all income groups now feeling the pinch of South Africa’s bleak economic prospects, an Old Mutual study has found.

According to an Old Mutual survey of 1,000 working households, one third of high income earners (R40,000+ a month) are feeling high level of money-related stress, with a fifth indicating they are overwhelmed.

Higher income groups have historically been able to weather financially straining times, however, rising inflation and worsening economic conditions have led to a tipping point where even the most financially sound households are struggling to make provision for any unexpected economic pitfalls in the future.

The survey revealed that half of the households covered would be able to find money to cover R1,000 in unforeseen expenses, while only a quarter could manage R5,000, with the rest turning to debt accrual.

Alarmingly, however, one third of the households said they could not even borrow enough money to cover R10,000 in unforeseen costs.

To get enough money, should they need it:

  • 56% said they would borrow from family
  • 30% said they would tap into savings
  • 26% would miss payments, and pay when they can

According to Old Mutual, irrespective of household income, when it comes to cutting back on spending, “luxury” purchases are typically the first to go.

Across all income groups the company found that holidays, eating out and entertaining friends were the biggest casualties when it came to making ends meet.

This is followed by non-essential purchases such as alcohol, shoes, clothing and beauty products.

Budget cuts also have an impact on jobs in South Africa, with 61% of households indicating that employing a domestic worker would also be on the list of things to go.

The table below indications the percentage of households that are cutting back on the listed expense, across the various income levels.

Expense Less than R6 000 R6 00 – R13 999 R14 000 – R19 999 R20 000 – R39 999 R40 000 or more Total
Holiday and travel 95% 94% 96% 83% 76% 88%
Eating out / Entertainment 90% 93% 87% 83% 71% 86%
Entertaining at home 93% 91% 85% 84% 66% 85%
Alcohol 87% 83% 78% 77% 57% 78%
Shoes and clothing 88% 76% 80% 66% 68% 76%
Hair and beauty 71% 71% 68% 59% 49% 65%
Cigarettes 72% 66% 63% 60% 57% 65%
Domestic worker / gardener 85% 79% 58% 43% 61%
Food and groceries 78% 64% 56% 53% 41% 60%
DStv/M-Net subscription 66% 40% 41% 32% 16% 38%
Payments to children / dependents 41% 37% 36% 33% 28% 36%
Electricity / water 37% 37% 34% 33% 27% 34%
Children’s schooling / education 33% 27% 24% 19% 17% 25%

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This is what stressed-out South Africans are willing to sacrifice to cut costs