Old habits are hard to break. After decades of poor financial education, low financial literacy, sky high personal debt (the highest global level in 2015) and a serious lack of saving, South Africans are not in a fantastic place when it comes to their personal finances – especially if they're not willing (or able) to change the habits of a lifetime.
A Wake Up Call
But confronted with even more political and economic uncertainty than usual, consumer approaches to finance may finally be on the turn. It's been a rocky few months for South Africa, with corruption allegations at the highest levels of government, a credit rating downgraded to junk status and a full-blown recession taking hold.
This troubling status quo could be precisely the wake up call South Africa needs to start getting serious about encouraging responsible approaches to personal finance, which champion saving over spending and budgeting over borrowing.
Higher Incomes Borrowing Less
Fresh responses to the Old Mutual Savings & Investment Monitor (which keeps track of 1,000 South African households across the country) suggest that the picture could be starting to change. Despite overall financial satisfaction levels dropped to a record low of 5.7 out of ten in July 2016 (largely thanks to high levels of debt), the 2017 responses painted a different picture, rising slightly to 6 out of ten.
Although lower income households are still feeling the pain, the picture is shifting somewhat for higher income households . A move which will hopefully extend to all areas of society over time. These higher income South Africans claim to be repaying debts and taking on fewer debts too, thus improving their financial position.
Net Wealth Increase
Despite the fact that cashflow has not improved for households since 2016 and that covering living costs is still tough with many South African incomes, overall household net wealth increased in Q1 to Q3 of 2017, pointing to a society which is becoming more savvy regarding their finances.
Making Saving 'Chic'
Does this suggest South Africa is finally embracing a culture of saving, after decades enjoying a more “buy now, think later” mentality when it came to money?
Hopefully, yes! And there are other indications that saving is finally getting the makeover it deserves in the country. One designer, Laduma Ngxokolo, has even teamed up with Sanlam to create a designer money-saving bracelet, complete with a QR code.
While a wide spectrum of organizations, from Operation HOPE to Wonga.co.za have been working to encourage financial education and responsibility for a number of years, it could be current seminal, national events which finally help South Africans see saving as chic.
Have you noticed a trend toward saving and budgeting emerging in recent months?
Has the current political climate changed how you think about your finances? Have your say below.
Image Credit: Pete Bellis on Unsplash.