As one of the most personally indebted nations in the world, it’s little wonder that South Africans have a reputation for short termism when it comes to personal finance. Now, a recent report into financial wellness, conducted by short term lender Wonga, has confirmed that South African citizens still struggle to take a long view regarding money matters.
South Africa’s short term financial focus
The survey of a diverse sample of 8,000 South Africans reveals that many members of the Rainbow Nation are more concerned about keeping a roof over their head today than they are about building a financially stable tomorrow. Housing tops the charts at South Africans’ biggest financial priority, with 34% of respondents considering rent or home loan payments to be their most important monthly expense. Groceries were selected as the second biggest monthly financial priority.
It’s heartening to note that 16% of respondents considered savings to be their biggest monthly financial priority, while 10% prioritised making debt repayments. However, these individuals were in the minority. In fact, 46% of participants claimed that, although they wanted to put money into savings accounts each month, they were unable to do so due to financial constraints. A further 56% stated that they wished to repay their debts but were also unable to do so.
The everyday takes priority
Evidently day-to-day needs are the current focus of many South Africans. The Wonga survey also revealed that 12% of people felt unable to buy essential food, while 15% felt unable to buy clothing as a result of financial difficulties. With such pressing needs, it’s abundantly clear why many individuals feel unable to apply a long term approach to their financial situations. For those struggling to cover rent and food costs, saving for significant future expenses such as education, a mortgage or retirement is simply out of the question.
Barriers to education and entrepreneurship
This set of fiscal circumstances presents many barriers to the South African people. Trapped in a month to month battle to cover everyday essentials, it’s impossible to invest in a future which may alleviate financial difficulties. Without finance to fund education, transportation or entrepreneurship, increasing household income becomes a major challenge. Education is a particularly pressing concern for the younger respondents to the survey, with 54% claiming that not being able to study was their greatest financial constraint – 15% of these young people claimed affordability was holding them back educationally.
What’s behind South Africa’s financial short termism?
The factors behind this short term approach to finance are multiple. Rising costs of living, a deep wealth divide, economic uncertainty, poor financial literacy and rising unemployment are all parts of the puzzle which push South Africans to a point where they can only fight financial fires – not save and plan for the future.
From increasing petrol prices, to skilled professionals emigrating to escape crime and economic difficulties, life in South Africa has become expensive – and its financial future on a macro level remains unclear. For individual South Africans, this makes saving and financial planning a significant and ongoing challenge.