SA’s Spending Habits Are Expected To Change During and After Lockdown

As more South Africans experience layoffs, job losses and decreased job security, it is becoming increasingly important to keep money and spending no longer looks like it did just 5 months ago.

While we know this is only true based on our social circles and interactions, it can be difficult to quantify and know exactly what people are spending less / more on. Fortunately, Old Mutual recently released their latest Savings and Investment Monitor report which, among other things, highlighted the spending they think South Africans will prioritize and which will most likely fall by the wayside.

The study with 1500 respondents examines in particular which spending changes are most likely to become a permanent shift, which priorities the different age groups have and which spending habits are most likely to remain the same.

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According to the report, around 58% of households across the country are facing overwhelming financial stress directly related to the COVID-19 pandemic. Before we get into how spending habits will change, let's take a quick look at some other key findings from the report:

• 57% of those surveyed earn less than at the end of February 2020.
• 40% of those currently employed only have enough money to survive for a month or less if they lose their jobs.
• 66% of respondents said they were constantly worried about losing their work income.
• 43% of respondents have taken out personal loans from financial institutions.
• 19% of respondents have taken out loans from family and friends.

“A very alarming consequence of the financial pressures South African households are facing is that just over 50% are currently using up their savings to make ends meet, 37% are falling behind on household bills and 23% are using their savings have redeemed. Investment Policy, ”Lynette Nicholson, Head of Research and Insights at Old Mutual, said in a statement.

“Another interesting finding relates to SA's informal savings. Although Stokvels membership has dropped from 44% to 34% this year, more people are now getting involved in food programs (from 9% in 2019 to 23% in 2020) and funeral homes (from 23% in 2019 to 38% in 2020). ). "

Expected changes in spending

According to the report, younger consumers are more reluctant to spend less on entertainment, takeaway, eating out and travel. Older people (50+), on the other hand, are less likely to cut spending on armed operations, insurance, help for children and medical assistance.

This essentially indicates that younger people are more likely to prioritize lifestyle items, while older people are more likely to prefer practical things that have a direct impact on their safety and future.

In general, however, food, entertainment, takeaway, and friends / family entertainment at home are cut the most, while medical aid, housing and insurance are the least likely to be cut.

The following table shows the newly based numbers, which show how spending patterns will change for people who are already spending money in this category:

"There is no doubt that the pandemic and its impact on our economy has exacerbated the already dire household situation and weighed unprecedentedly on budgets, savings and general financial well-being," added Nicholson.

"There is no better time than now to make responsible, informed financial decisions to ensure you can withstand the pressure and not jeopardize your long-term savings goals and financial future."

Check out the full report Here.

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