SA’ers optimistic about their financial affairs

Henry

Despite numerous economic challenges, South Africans appear to be optimistic about their finances, with many expecting an increase in their income over the next 12 months.

According to the Consumer Pulse report from the credit bureau TransUnion, 74% of households indicated in the fourth quarter of 2023 that they expect a stronger bank balance in the following year. Only 6% of respondents who took part in the poll suspect that their wallets are likely to get thinner and thinner.

About 20% expect their income to remain the same.

TransUnion further found that millennials (80%) and Generation Z (77%) are the most positive about their finances.

“This optimism, which reflects resilience in the face of prevailing economic challenges, shows the potential for recovery and growth,” the report said.

Debt paints a darker picture

However, the picture looks quite different when it comes to debt repayment.

“Only 59% (of households) expect to meet their current bill and debt obligations, while 34% of Generation Z and 42% of millennials think they will not be able to pay their bills or debt.”

TransUnion says household income has changed in several interesting ways, with new businesses (16%) and higher salaries (14%) being the main reasons for a financial boost.

Decreases in income are attributed, among other things, to job losses (23%) and lower wages (17%).

“These factors highlight the delicate balance between career advancement, economic security and the role of entrepreneurship in promoting financial well-being.”

Budgets look different

The report further indicates that consumers have adjusted their budgeting strategies over the past three months, with 29% paying off their current debt faster. A total of 25% put more money into emergency savings funds or stick sheets, while 18% put more money away for retirement.

Almost half (47%) of all respondents want to stop spending over the next three months – especially on non-essential items.

A total of 38% plan to hit the brakes on retail purchases. They also want to avoid large purchases.

It appears that especially generation X (51%) and the baby boomers (56%) will spend money conservatively.

When it comes to paying bills and other debts, 34% of respondents indicated that they will dig into their savings accounts, while 31% plan to make only partial payments within their means to pay off debt.

According to TransUnion, these budget strategies are positive and indicative of “proactive debt management”.

However, household spending looks different among all the different generations.

Where 41% of baby boomers and generation X expect an increase in bills and loans, generation Z consumers predict that their spending on retail purchases will increase.

“What is interesting is that both millennials (40%) and generation Z (44%) want to increase contributions for retirement and investments.”

They want to do this by avoiding large purchases. According to the report, large purchases by these two generations are expected to decrease by 40% and 35% respectively.

“These expectations reflect a generational turning point to ensure financial stability over the long term, especially in light of prevailing economic uncertainty.”

Baby Boomers People born between 1946 and 1964.
Generation X People born between the mid 1960s and late 1970s.
Millennials People born between 1981 and 1996.
Generation Z People born between the mid-1990s and mid-2010.