WORKING South Africans are more positive about their finances than they have been since the onset of the Covid-19 pandemic in early 2020. This is the good-news message to come out of the 2024 Old Mutual Savings and Investment Monitor Report released this week. While economic challenges remain, we appear to have turned the corner in managing our money and improving our prospects.
Voyukazi Mabude, head of knowledge and insights at Old Mutual, says the latest report reveals how working South Africans, from young adults starting their careers to those planning for retirement, are determined to secure their financial futures despite ongoing economic hurdles.
“The report highlights how South Africans are not only resilient but also innovative, taking proactive steps to improve their finances by reducing their reliance on debt, being more entrepreneurial and increasing their income streams. This shift in mindset is truly inspiring. It shows that, despite the challenges, South Africans are finding ways to thrive and are navigating their financial journeys with optimism and determination,” Mabude says in her introduction to the report.
The Old Mutual Savings and Investment Monitor has been conducted annually since 2009. This year’s research surveyed 1 500 working South Africans aged 18 to 65 earning a personal monthly income of more than R8 000. The fieldwork was carried out in April and May and the data was weighted according to the income and demographic profiles of this group.
One of the top findings of the research was that respondents were less stressed financially than they had been in the past few years. Just over a third (37%) said they had “high” or “overwhelming” stress, compared with 45% last year and 58% in 2020.
The report also indicates an improvement in income levels: only about one in five (19%) respondents reported earning less this year than last year, compared with 27% last year and a massive 53% in 2020.
There has been a strong upward trend in financial satisfaction since 2020, with more people reporting better household budgeting and debt management and an increased ability to save.
And generally the mood is brighter than it has been since the pandemic: 68% of respondents said they believe that their financial situation will improve in the next six months, a significant increase from 53% in 2020.
Among the reasons for this optimism and improved financial situation has been the growing ability of South Africans to diversify their income streams. Respondents who have a side hustle or do extra after-hours work alongside their regular jobs have increased to 57% from 50% last year. This is especially true among younger people: 73% of respondents aged 19 to 29 are “polyjobbers”.
Entrepreneurship is also on the rise, with 47% of employed South Africans owning a business, up from 44% last year. 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% last year.
Interestingly, 42% earn at least some income through social media and for 17% this is a significant portion of their income.
Debt remains a sticking point. Debt servicing costs as a percentage of income have been around 21% for the past four years. However, there appears to be slight improvement in debt management since last year. The percentage of consumers who have fallen behind on bills, card payments, and other payments has declined from 25% to 23%, and more respondents said they had approached their creditors to renegotiate their payment arrangements (30%, up from 24% last year).
Of concern is the fact that 36% of respondents acknowledged they gamble frequently, hoping to make money to cover some of their expenses or debt. This is higher among lower income earners.
Turning to savings, a particularly positive trend is a noticeable effort to preserve savings, with a reduction in the number of people dipping into their savings (from 54% last year to 45% this year), cashing in their investments (18% to 15%) and pausing contributions to their investments (14% to 9%).
Many of the positive trends shown in the report may be partly attributed to a higher level of financial education among younger (and older) working South Africans. But there is still work to be done.
"As we continue to face economic challenges, the emphasis on financial education and support will be paramount in ensuring that all South Africans can achieve and maintain financial well-being," says Mabude. "The resilience and ingenuity of South Africans are key drivers of this progress, turning obstacles into opportunities for a brighter financial future."
PERSONAL FINANCE