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New research shows that South Africans are struggling to build wealth

The aspirations of many South Africans to have a brighter future were being held back by lack of opportunities, economic challenges and unhealthy financial habits. File Image

The aspirations of many South Africans to have a brighter future were being held back by lack of opportunities, economic challenges and unhealthy financial habits. File Image

Published Jul 30, 2022

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THE aspirations of many South Africans to have a brighter future were being held back by lack of opportunities, economic challenges and unhealthy financial habits, according to research conducted by short-term lender Wonga in June this year among over 12 700 South Africans.

The research was based on their current financial status, as well as their capacity and opportunity to accomplish future financial goals.

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Wonga chief executive Brett van Aswegen said that following a similar research study that they conducted in 2019, they wanted to understand the average South African’s financial position and whether, according to their current financial status and earning potential, they were likely to achieve their goals. “We believed that this would provide interesting insight into financial wellness

and the nation’s ability to overcome the current economic challenges faced in our country,” Aswegen said.

Wonga asked participants a series of questions pertaining to current income, level of education, ownership of assets like vehicles and property, as well as financial priorities and long-term financial goals.

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Wonga said that their findings showed that although South Africans had a great desire to work towards a better financial future, a lack of opportunity, ongoing economic challenges and a lack of financial literacy threaten to undermine their aspirations.

Regarding the gross monthly income, South Africans were largely very ambitious, with 20 percent of the respondents to the survey aspiring to earn as much as the country’s top 3 percent of earners, with salaries of over R50 000 per month. Despite these ambitions, 50 percent of survey participants reported that they currently earn a gross amount of less than R10 000 a month.

The financial services company said that the reality of the country’s economic challenges were also clear as some 4 percent of the respondents were aspiring to at least earn just R4 000 per month in the future. This was still far below the accepted Living Wage of R 6 700 per month.

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On monthly expenses, South Africans spent the bulk of their monthly income on just keeping a roof over their heads and putting food on the table.

A large percentage (31 percent) of the survey respondents considered paying their rent or home loan as their most important monthly expense, followed by paying for groceries at 26 percent.

Some 12 percent of people indicated that they regarded putting money into savings as one of their top priorities. The need for people to use the majority of their income just to survive on a day-to-day basis meant that their long-term financial wellbeing was negatively impacted.

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Van Aswegen said their survey showed that just 18 percent of South Africans prioritised making debt repayments towards their cars, personal loans and credit cards above all else. “This is worrying, as it means people are in increasing danger of paying excess interest on loans or even defaulting on payments.”

Despite having ambitious plans for the future, the opportunity for South Africans to better their livelihoods was held back, in many cases, by lack of access to tertiary education. Of the survey participants, 58 percent did not have any qualifications beyond high school education, with 39 percent of respondents citing financial constraints as the main reason for not furthering their studies.

“The survey also showed that 32 percent of young people have to look after their families instead of studying. This feeds into an ongoing cycle of inter- generational poverty, meaning it is near impossible for young people to build better futures for themselves, even if they have ambitions to,” van Aswegen said.

Many respondents indicated that they would like to adopt healthier financial habits, but they were currently unable to due to financial constraints. This included 56 percent who said that they would like to pay off their debt and 48 percent who said that they would like to put money into savings but unfortunately, could not afford to do so.

In 2019, data from Wonga’s survey reflected that 16 percent of respondents considered putting money into savings. This year, however, this has decreased to 12 percent.

A large percentage of respondents also claimed that financial constraints were holding them back from travelling locally (19 percent), moving to a new house (18 percent) and buying necessities like food or clothing (16 percent).

Van Aswegen said when financial constraints impeded an individual’s capacity to work towards their dreams, it threatened to negatively affect their long-term financial wellbeing and often led to discontent.

Despite current hardships, Wonga said South Africans remained positive and ambitious towards

their financial goals. The research indicates that 34 percent aimed to own a luxury vehicle, and 67 percent want to buy a property to rent out for extra income.

Of the 44 percent of South Africans who were saving for their retirement, 38 percent wished to

retire between the age of 40 to 50, and 40 percent would like to have saved up to ten times their annual salary.

Van Aswegen said South Africans were resilient and had shown time and time again that they could absorb negative experiences and grow from them. “The people of our country can thrive in situations that seem hopeless and are self-reliant and focused on achieving their dreams.”

“It is encouraging to see from our research that South Africans continue to demonstrate their ability to overcome formidable odds and are determined to rise above whatever challenges lay before them,” van Aswegen concluded.

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