SA consumers losing control of their money

About 73% of South African consumers did not feel in control of their financial situation in the third quarter of 2014, according to the MBD Consumer Financial Vulnerability Index released on Wednesday.

“MBD’s CFVI shows that although consumers experienced severe pressures on their expenditure budgets and saving levels, it was mainly the insufficiency of their income and inability to cope with increasing debt servicing costs that contributed to put the strain on their cash flow situation,” it said in a statement.

“Despite this dire situation, MBD’s CFVI nevertheless improved slightly to 51.4 points in Q3 2014 from 50.2 points in Q2 2014. This means that consumers, on average, remained in the mildly exposed category according to the CFVI measurement scale.”

The index, which was developed in conjunction with the University of South Africa’s Bureau of Market Research found that 73.1% of consumers did not feel in control.

It found that consumers felt mildly exposed in terms of the sufficiency of their income, savings and expenditure. However, they remained very exposed concerning their debt servicing situation.

Distributional analyses revealed that in the third quarter of the year, some 23.8% of consumers felt financially vulnerable, 49.3% financially exposed, and only 26.9% financially secure.

“Not surprisingly, the bulk of the lowest income group felt either financially vulnerable or financially exposed,” it said.

“For instance, within the R0 to R71,999 per annum income group, some 29.6% of consumers felt financially vulnerable. This comprised 96.6% of all financially vulnerable consumers.”

However, the more significant result was in the R360,000 to R479,999 per annum income group.

“Although only 0.5% of all the financially vulnerable consumers was in this income group, they nevertheless comprised 19.9% of consumers in the R360,000 to R479,999 per annum income.”

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SA consumers losing control of their money