Major turning point for South Africans earning around R25,000 a month
The 2024 Old Mutual Savings and Investment Monitor (OMSIM) shows that South African households hit a significant turning point this year, feeling less stressed and more financially at ease as they take control of their finances.
This is has largely been born out of necessity, with households being forced to find ways to ensure their financial stability and better control their debts.
As a result, many have changed the way they generate income and cut costs – reducing the stress involved with navigating what has been a rough few years, financially.
The OMSIM study look at employed South Africans aged 18 to 65, earning a personal monthly income of R8,000+ who make up about 24% of the nation’s adult population. The study is rooted in a representative survey of over 1,500 respondents.
More than half of the survey respondents are working South Africans with a personal monthly income below R25,000, with the median in the range of that.
The headline feature of the study—measuring financial sentiment among households—shows that 68% of consumers are optimistic that their financial situation will improve in the next six months.
This is lower than the 71% recorded in 2023, but leaps and bounds higher than the 53% in 2020.
Keeping sentiment down are the harsh economic realities around the cost of living and the stagnant economy, which has put income under pressure, even deteriorating in real terms.
However, this is countered by the much more hopeful turnaround seen in 2024, and South Africans taking control of their own financial realities in response to this.
This is particularly notable by the improvement in budgeting, debt management and savings – while consumers are tapping into more income streams through side-hustles, second jobs, and starting businesses.
According to Old Mutual financial planner Howard Freese, many households have realised that having one income stream isn’t enough, which has been a turning point.
South Africa is now largely a ‘polyjobber’ environment, with 57% of households in the survey juggling side hustles, freelancing, and after-hours work alongside their regular jobs.
“(Households have) started side businesses, freelanced, or ventured into entrepreneurship. It’s a tough road, but it gives them control over their income and future,” Freese said.
This is a notable increase from 50% in 2023, reflecting a significant turn in the environment. The trend is even more prominent among the youth, where 73% of those aged 18 to 29 are ‘polyjobbers’, embracing the gig economy.
Notably, entrepreneurship is also on the rise, with 47% of employed South Africans owning a business, up from 44% in 2023, Old Mutual said.
“This entrepreneurial spirit extends across all age cohorts, fuelling a surge in business-related savings goals, with a third of individuals saving to start or finance a business, up from 27% in 2023.
At an overall level and regardless of platform, 4 in 10 (42%) earn at least some income through social media, and for 17%, this is a significant part of their income (54% and 24% among younger consumers aged 18 to 29).
Work income supplementation via passive income streams, such as investments and renting out property are also popular, as well as additional income received from family.
The other big shifts
On top of the big shift in income streams, South Africans have also become more savvy when it comes to saving and handling their debts.
In terms of debts, households are still putting around 21% of their income towards servicing debts, while also boosting their savings – now at 23%, up from 20% last year.
Consumption and living expenses are taking the hit, continuing the decline from 45% of spending to 41% in 2024.
Positively, though, households are not dipping into savings as much to pay off their debts—though it still remains the biggest source.
45% of people are taking out of savings to pay off debt, down from 54% in 2023.
However, the overall picture for managing finances has improved almost across the board, with the only metric to get worse being the number of households falling behind on stokvel or savings club contributions.
South Africans are now being more proactive in handling their debts, approaching banks and lenders to negotiate payment arrangements, and are bringing stability to their loans, credit cards, and other financing obligations.
In addition, Old Mutual noted a slight decline in new personal loans being sought.
“This implies that consumers are servicing what they have, with fewer taking on fresh obligations,” it said.
On the downside, however, the group noted that at least one bad habit is taking root, with more people turning to gambling in the hopes that a big payday will alleviate their debts.
Additionally, 43% of consumers are still stressed out about debt, despite the more positive turnaround and money mindset.
Another big worry is retirement, with only one in four consumers expressing confidence that their retirement savings will be adequate – and nearly half (49%) not being confident at all.
Overall, though, almost all of the metrics covered by the OMSIM show that, contrary to the popular belief that pessimism reigns, South African households are pushing through and looking up.
Read: 10 jobs that don’t need a degree in South Africa – with one paying over R220,000 a month