Here’s how many South Africans could survive a R10,000 financial emergency

New savings data shows that South Africans are under increasing financial pressure, with many living from paycheque to paycheque, unable to save.

The data is drawn from the annual Old Mutual Savings & Investment Monitor survey, which tracks shifts in the financial attitudes and behaviour of South Africa’s working metropolitan population.

The report is based on 1,000 household interviews among working South Africans living in major metropolitan areas, and examines levels of savings and investment as well as their attitude to finances in general and savings in particular.

Only 7% of respondents say they are living comfortably, while 29% say they are ‘doing alright’. Nearly a third feel they’re just getting by, followed closely by 29% who are ‘finding it difficult’.

“Probably the most disturbing trend this year is that saving for emergencies, at 30%, is the lowest since we started publishing our report 10 years ago. This is down from 43% last year,” Old Mutual said.

The report underlined the ability of people to cope with a financial emergency, much like a recent survey published by Budget Insurance.

To get a fix on the financial “robustness” of South Africa working metro households and to better understand behaviour in the face of a financial emergency, respondents in the Old Mutual study were asked how they would handle an unforeseen expense of R1,000, then R5,000, rising up to R100,000.

Respondents were given the option to “bail” if they reached a monetary ceiling where they would be unable to either use existing savings, sell an asset or tap into a credit line to meet the amount.

Those households earning less than R6,000 are resorting to loans more readily whilst those in mid category (R14,000 – R19,999) and (R20,000 – R39,999) are more strained. Households earning more than R40,000, appear better equipped to cope as compared to last year.

In 2018, at total market level, all bar 2% of working households could handle an unforeseen expense of R1,000. More than half (58%) of respondents said they would access available savings, 6% would use a credit card, and the remainder would borrow the money, most likely from a friend (20%) or stokvel (9%).

Unsurprisingly, at R100,000 the vast majority (85%) of respondents would not be able to handle such a lump sum.

 

In the case of the Budget Insurance survey, just over half (52%) of South Africans said they are saving for an emergency, while only 19% would be able to survive for three months if they were to lose their income.

The survey also found that if an unexpected emergency occurred – which warranted an amount of R10,000 – 26% of South Africans would need to borrow more money from friends or family, and 11% would take out a loan to cover the remaining balance.

A further 7% said they would cover the emergency using credit.


Read: Here’s what stressed-out South Africans are willing to sacrifice to cut monthly costs

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Here’s how many South Africans could survive a R10,000 financial emergency