South Africans are getting better at managing their personal finances – but there’s still room for improvement. Moreover, our economy needs to improve significantly before we can consider our country as financially healthy.
These were some of the insights extracted from the Momentum/Unisa South African Household Financial Wellness Index for 2016, released in August 2017. Data from the study indicates that households were more financially comfortable in 2016 than the previous year. A financial wellness table in the study indicates a slight improvement in how families were coping financially. The top two green bars below indicate an increase in financial wellness from 23.2% in 2015 to 26.3% in 2016.
The index classifies people or households as financially well if they “continually plan and manage their money so that they can afford their expenses and reach their goals over their lifetime.” Nationally, 2 688 households participated in the study and, depending on their responses, were categorised into one of four degrees of financial wellness:
According to the study, 26.6% of the sampled households behave responsibly toward their own consumption. On the other hand, 30.1% of households are struggling to make ends meet, while 41.3% of households are financially exposed and another 2.0% are financially distressed.
Seven income groups were assigned to respondents. The low-income group (R20 501- R93 000 per annum) had the most respondents (44.5%) of all groups, while 43.4% of all respondents have a secondary education only. The majority of respondents (54.4%) are employed, however, 2.1% of those who are financially distressed, say they will be able to cope with emergency expenses. The report points out that one of the reasons why households cannot put money away for a rainy day is because they fall in the low income bracket that places them in a weak financial position.
The Household Financial Wellness Index for 2016 offers the following advice to help improve your financial life.
In 2015, the World Bank revealed that South Africans were the world's biggest borrowers, however, a recent report spotlights a decline in the uptake of Personal Loans, which could indicate that household’s finances are improving.