Only 17% of South Africans satisfied with their current financial situation

Only 17% of South Africans surveyed are not unhappy with their current financial situation, while a massive 81% experience stress when managing their finances, and only 35% trust their financial abilities.

These figures come from Sanlam’s first-ever Financial Confidence Index, an annual index that assesses the financial confidence levels of the country’s adult population. The researchers for the study surveyed over 1,500 respondents representative of the adult South African population with a monthly income of R1,000 or more.

They used three key behavioural finance indicators to assess overall financial confidence:

• Financial determination, which reflects an individual’s proactive mindset and commitment to achieving their financial goals.
• Financial resilience, that represents the capacity to bounce back from financial setbacks or unexpected challenges and adapt to changing circumstances while maintaining a sense of stability.
• Financial well-being, that signifies the overall state of financial health and satisfaction and where individuals have the resources and knowledge to meet their present and future financial needs.

Some of the other most important highlights are:

• People between the ages of 40 and 60 exhibit the lowest self-trust levels.
• 57% feel confident identifying suitable financial products.
• 67% show courage in negotiating financial matters.
• 52% have access to credit
• 52% rely on friends and family for financial support.
• Only 34% have insurance coverage for unforeseen financial risks.
• A mere 33% do not feel embarrassed about their childhood financial situations.

“Financial confidence is the level of assurance and belief in your ability to manage and navigate your financial life effectively. Personal finances have a profound impact on human behaviour, influencing decision-making, lifestyle choices, relationships and overall well-being.

“When individuals are financially confident, they are more inclined to experience a higher level of overall happiness and satisfaction,” Mariska Oosthuizen, chief marketing officer for Sanlam, says.

“Benchmarking the level of financial confidence of South Africans is vital when driving financial education and empowerment initiatives. The public and private sector must collectively work towards equipping individuals with the necessary tools to build financial confidence.”

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Concerning trend in levels of self-trust

The survey also highlighted a concerning trend in the levels of self-trust among different age groups. Sipho Mncwabe, head of adviser transformation at Sanlam, says that this finding underscores a significant gap in financial guidance and education.

“It highlights the need for far greater levels of financial education and advice to build self-trust. South Africans have multiple avenues available for boosting their financial management abilities, such as reading materials from dependable sources and engaging a reliable financial adviser.”

However, despite a lack of self-trust in their financial abilities, 57% of respondents felt confident in identifying appropriate financial products for their needs. This sentiment was, however, slightly less common among individuals older than 40, suggesting a potential generational gap in financial literacy and awareness.

The younger age groups had higher confidence and self-trust and demonstrated more proactive financial determination, likely contributing to their ability to identify suitable financial products. Mncwabe says the age-based disparity in confidence could be influenced by different life stages rather than solely indicating a skill deficiency in older individuals.

On the positive side, the survey showed that the majority (67%) of South Africans surveyed exhibited the courage to negotiate prices and repayment terms, indicating either a certain level of assertiveness in managing their financial matters or necessity-based negotiation due to tight economic circumstances.

One encouraging trend was nearly 70% of respondents’ eagerness to upskill themselves to increase their earning power. Dr Mavis Mazhura, an international behavioural science and performance specialist, says it is encouraging to see high levels of awareness regarding financial knowledge gaps and financial beliefs.

“While awareness is progress, it must translate into financial learning goals and education as learning about money boosts financial confidence. This is where financial services organisations have a key role to play.”

ALSO READ: One in three South Africans cannot pay their bills – survey

Awareness could also be self-limiting in current financial situation

She also says there may be a flip side to the finding.

“In the financial resilience dimension, people generally still have a low level of trust in their financial abilities and therefore awareness can be self-limiting.”

Regarding financial support networks, the survey showed that 52% of respondents had access to credit if needed, while 52% felt they could rely on friends and family in financial emergencies.

In addition, 43% of respondents believed they could turn to their social circles to gain financial knowledge, indicating the importance of informal networks in acquiring financial insights and money for emergencies.

However, the survey also highlighted several areas of concern. Only 34% of respondents had insurance products to adequately cover their financial risks, indicating potential vulnerabilities in unexpected emergencies.

The study also delved into respondents’ financial well-being, and the results showed that only a third (33%) did not feel upset or embarrassed about their financial situation when growing up.

In addition, only 17% did not feel unhappy about their current financial situation, highlighting ongoing challenges in achieving financial contentment. Feelings of stress, hopelessness and discomfort in various financial contexts were common among respondents.

Oosthuizen says these findings collectively emphasise the need for comprehensive financial education, guidance and support systems across South Africa.

“As the country navigates an evolving economic landscape, empowering individuals with the skills and knowledge to make informed financial decisions becomes important.”

The insights from this research could be a valuable foundation for policymakers, financial institutions and educators striving to improve financial literacy and financial well-being among South Africans.