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Holidays, entertainment expenses and retirement plans are becoming a rare feature in South Africans’ monthly budgets. According to the 2016 Old Mutual Savings & Investment Monitor released yesterday, two-thirds of people surveyed in cities described their level of financial stress as overwhelming or high.
Lynette Nicholson, research manager at Old Mutual, said findings reflected the dire state of the broader economy. The widespread sense of financial dire straits was highlighted by the number of people who relied on loans, especially from friends and family.
When it came to servicing credit card debt, only 13% of South Africans paid off their credit cards in full at the end of the month, with an increasing number of card-holders only paying the minimum instalments, she said.
“Dependency on children for future care and financial assistance during retirement is also at its highest level yet at 45%, up 4% since 2015.
This finding correlates with a steadily rising sandwich generation – those who are supporting not only children, but also parents or other ageing dependents – which reached a record high of 29% in 2016, climbing considerably from 25% in 2015.”
The monitor found that in response to financial hardships, households were attempting to cut costs where possible, curbing spend on luxuries such as travel (88%) and entertainment (86%).
According to the survey, 77% of South Africans avoid situations where they may overspend and 71% take more packed lunches to work. There was no “sugar-coating” what lies ahead. The general loss of confidence witnessed throughout the country, coupled with a dangerous growing dependency on personal loans “should set off alarm bells”, Nicholson said.
Old Mutual chief economist Rian le Roux said that just shy of half of South African households were saving less than they were a year ago. This was the lowest savings recorded since the inaugural 2009 monitor. – denisew@citizen.co.za
