MANY South Africans aim to live the 'high life', owning a number of properties and luxury cars, but the reality is that, with only basic qualifications and high levels of debt, few will realise their aspirations. Supplied
Despite tight financial constraints, South Africans aspire to earn large salaries, drive luxury cars and own multiple properties. 

This according to short-term lender Wonga’s recent Financial Well-Being Report, which was based on the responses of almost 8000 citizens.

Wonga chief exeuctive Brett van Aswegen said they wanted to understand the average South African’s financial aspirations and whether, based on their current financial status and earning potential, they were likely to achieve their goals.

He said Wonga asked participants a series of questions about their income, education, assets, financial priorities and long-term financial goals.

“Our findings showed that, although South Africans have a desire to flourish and work towards a greater financial future, a lack of opportunity, paired with unhealthy financial priorities, could threaten to undermine their aspirations,” said Van Aswegen.

The report found that 58 percent of participants didn’t have any qualifications beyond basic education, with respondents citing financial constraints as the main reason for not furthering their studies.

The youth, who accounted for a tenth of participants, claimed that the inability to study was their greatest financial constraint, while 40 percent of adults over the age of 25 claimed they would still like to study but didn’t have the money to do so.

Twenty-seven percent with a higher education aspired to earning more than R50 000 a month compared with only 12 percent of those who did not.

“Education is a significant contributor to wealth, with the bulk of higher education graduates entering the upper echelons of the national income distribution. Therefore, for many who lack a higher qualification, achieving their ideal income might prove challenging,” said Van Aswegen.

The survey found that 87 percent of respondents aspired to earn R10 000 or more a month but, with an unemployment rate of over 25 percent, it is unlikely this aspiration would be met. According to the Credit Suisse Wealth Report 2018, only 10 percent of adults earn R10 800 or more a month.

The survey found that men were 11 percent more likely than women to put off marriage as a result of financial constraints.

More than half of respondents considered paying for housing and groceries their most important monthly expenses, and more than 50 percent claimed that financial constraints prevented them from saving money or paying off debt.

Although 62 percent lived in rented homes, 99 percent aspired to owning houses, with most claiming to want at least two properties of their own.

However, the banks’ requirement for a healthy credit rating and a minimum deposit before granting home loans are likely to prevent those who fail to manage their debt and save from making their way on to the property ladder, the report found.

It also showed that more than half of car owners paid for their vehicles with a loan.

Many respondents aspired to own luxury vehicles such as BMW or Mercedes-Benz, although attaining this goal would prove challenging if they couldn’t manage their debt.

The report added that, ideally, people should start saving for their retirement in their 20s and have at least 10 times their annual salary saved if they planned to retire in their 60s.

But only 50 percent claimed to be saving for retirement despite the majority planning to retire before 60, while only 44 percent aimed to have a minimum of 10 times their annual salary saved by the time they retired, which will make it difficult for them to maintain their current quality of life in later years.

According to Wonga’s research, South Africans like to dream big, from earning large salaries to owning expensive cars and multiple properties, but for many their financial aspirations are not in line with their financial priorities.

“When financial constraints impede one’s capacity to work towards a dream, it threatens to undermine their long-term financial well-being and leads to discontent. South Africans need to re-evaluate their aspirations and set realistic financial goals, which, with healthy financial attitudes, can be achieved,” said Van Aswegen. 

PERSONAL FINANCE