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

Old Mutual has published its latest savings and investment monitor, highlighting how South Africans are struggling to cope financially after more than a year of Covid-19 lockdowns.

The monitor was conducted through an online survey, with a minimum income threshold of R8,000 and above considered.

The 2020 results pointed to a very stressed and financially pressed South African consumer, Old Mutual said.

“Not only were absolute income levels under pressure as many took salary cuts, but demands on the ‘share of wallet’ were increasing as never before.

“A third of consumers found that they are having to support more people financially than they did before the pandemic. Coupled with that was the constant fear of retrenchment or loss of income. It was no wonder that stress levels skyrocketed.”

There is also strong evidence that buffer savings, already under pressure in 2019, had been further eroded with the resilience of relatively higher earners now being tested, the group said.

Financial emergency

Consumers were asked to assess their available funds in the face of retrenchment or loss of income.

In 2021, only a third of respondents (34%) said that they have enough money to last a month or less.

By comparison, 13% of respondents said that they could survive for two months, while just over a third of respondents (36%) said that they have enough money stacked away to survive for more than three months.

Despite these bleak findings, the monitor found that South Africans are more optimistic about the future.

“Generally speaking, consumers are optimistic that their financial situation will improve over the next six months,” Old Mutual said. “Last year posed the question as to whether this was a reflection of true optimism or resigned acceptance that ‘the only way from here is up’.

“We believe that there is a growing sense of optimism, fuelled no doubt at least in part by the long-awaited vaccine rollout.”

Those aged 50+ years or older were relatively pessimistic, however, the group said. This is probably due to concerns around retirement savings as well as the prospect of finding employment at their life stage if retrenched.

The position of higher earners is more resilient, but even at a household income of R50,000, the data shows that one in four respondents would not make it past a month.

“The financial stress and pressure brought on by the Covid 19 pandemic is evident throughout these results but there are some signs the things are starting to ease up as working South Africans adjust to the new normal,” Old Mutual said.

“Part of that adjustment is born out of increased awareness of the need to save and build up buffer savings and generally to take one’s finances and income security more seriously. If this Covid-19 pandemic has taught us anything, then it is that nothing is certain and nothing (lives nor money) should be taken for granted.

Read: South Africa has run out of options, say economists

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