South Africans show resourcefulness: financial confidence grows despite economic challenges according to Old Mutual

24 July 2024 Old Mutual

Despite ongoing economic challenges, South Africans are showcasing remarkable financial resilience and adaptability, driven by increased confidence in their ability to save and invest.

According to the latest Old Mutual Savings & Investment Monitor (OMSIM) 2024 survey, financial stress among working South Africans has significantly decreased. The percentage dropped from 58% in 2020 to a reassuring 37% in 2024. Moreover, 68% of employed South Africans are optimistic that their financial situation will improve in the next six months, up from 53% in 2020.

The survey also reveals a promising trend in access to financial advice. 43% of working South Africans used a financial adviser in 2024, up from 39% in 2023, and 86% consulted their adviser in the past year. "These key findings suggest increased access to financial advice is responsible for driving financial confidence. This optimism is crucial for promoting proactive financial behaviours and continued resilience,” says Vuyokazi Mabude, Head of Knowledge and Insights at Old Mutual.

South Africans are not just resilient but resourceful. “This shift in mindset is evident in their proactive approach to managing their finances. The survey revealed that respondents are increasingly finding innovative ways to improve their financial well-being, from engaging in side hustles to participating in the gig economy,” says Mabude.

“The survey found that 57% of South Africans now juggle multiple income streams, up from 50% in 2023, showcasing a significant trend towards financial diversification.”

Youth and Polyjobbing

Polyjobbing, the practice of having multiple jobs or income sources, is especially prevalent among young adults, with 73% of 18-29-year-olds engaged in this practice. “Additionally, 54% of this 18-29-year-old group earn some income through social media, with about a quarter considering it a significant part of their overall income. This rise in income diversification by young working South Africans highlights economic adaptability and technological savviness,” says Mabude.

Entrepreneurship on the Rise

The OMSIM also revealed a growing entrepreneurial spirit among South Africans increasingly seeking financial security and growth opportunities outside of traditional employment.
"OMSIM revealed that 47% of working South Africans own a business, up from 44% the previous year, while about a third of individuals (32%) are prioritising saving to start or finance a business, up from 27% in 2023. The increase in business ownership and savings for entrepreneurial ventures highlights a significant shift towards self-reliance and confidence in the economy, which has improved to 36% from 27% in 2023," she says.

Women and Financial Recovery

However, OMSIM revealed that it’s not all positive for South African women, despite similar patterns of polyjobbing and entrepreneurship to men. Before COVID-19, men and women had almost identical financial satisfaction and stress levels, but the pandemic hit women harder, causing a longer recovery. By 2020, women who were highly financially stressed surged to 60% and remained above 50% until 2023. Men who were highly stressed shifted down more rapidly from 57% in 2020 to below 50% by 2022.

“Significant improvements occurred over the past year, but challenges remain. By 2024, women who were highly financially stressed decreased to 39%, still reflecting the greater challenges faced. Meanwhile, men's stress levels decreased to 34%,” says Mabude.

Preparation for the Two-Pot System

A critical aspect of this year's report is the introduction and awareness of the Two-Pot retirement system effective from 1 September. The monitor reveals that 43% of South Africans don’t fully understand the new reforms.

"While 63% of South Africans are aware of the new laws, understanding remains low with only 24% claiming to comprehend the system very well. Employers are urged to bridge this knowledge gap, as only 22% of employees with a pension or provident fund through work reported receiving comprehensive information and training on the reform," says Mabude.

Other interesting findings include:

• Consumers are making positive trade-offs and cutting expenses. For example, 66% have used loyalty points/rewards, and 32% have switched to cheaper TV streaming options.
• 30% of respondents have approached creditors to make other payment arrangements, up from 24% in 2023.
• 46% of respondents indicated that a comfortable retirement is their top savings goal. This goal is followed by 43% saving for an emergency or rainy-day fund, and 43% are focused on paying off debt.
• There is a gradual increase in the uptake of offshore investments, with 29% of respondents having money invested in offshore assets, up from 24% in 2022.

The OMSIM 2024 report correlates professional financial guidance with improved financial confidence and consequently lower financial stress. "As we continue to face economic challenges, the emphasis on financial education and support, particularly in understanding and maximising the benefits of the Two-Pot retirement system, will be paramount in ensuring that all South Africans can achieve and maintain financial well-being," concludes Mabude. "The resilience and ingenuity of South Africans are key drivers of this progress, turning obstacles into opportunities for a brighter financial future."

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