File Image:
File Image:

Pandemic provides a crash course in financial resilience

By Martin Hesse Time of article published Aug 11, 2021

Share this article:


Old Mutual's annual Savings and Investment Monitor always provides useful insights into how working South Africans are managing their money, but the study has perhaps never been more relevant than now, as we face the unique challenges posed by the pandemic.

Attending the online presentation by Old Mutual and reading the report (go to for the full report and video presentations), I was struck by a dichotomy in how South Africans have responded to the crisis. Many people have shown resilience and resourcefulness by spending less, saving more, paying down debt, taking online courses to improve their employability and securing multiple income streams. Conversely, people have been forced through adverse circumstances into making negative financial decisions, such as taking on more debt or dipping into retirement savings. I don’t think the two groups are mutually exclusive: people have just had to do what they can.

A caveat: the study was of employed urban South Africans – “the lucky ones”, in the words of Lynette Nicholson, head of research at Old Mutual, who co-ordinated the project. In fact, it was a study of relatively comfortably off South Africans, who earn more than R8 000 a month. (I say “relatively comfortably off” because, according to a recent study by the UCT Liberty Institute of Strategic Marketing, 16.6 million South Africans, or about a quarter of the population, were living on less than R3 500 a month in June 2020, up from nine million in 2017.)

Izak Odendaal, investment strategist at Old Mutual Wealth, pointed out that although employment income had recovered to its pre-pandemic levels, employment numbers hadn't. In other words, the “lucky ones” are earning more overall, but declining in number, meaning that the pandemic has widened the inequality gap.

Here are some of the highlights of the research:

Sandwich generation

The percentage of working people supporting children and ageing parents or other older dependants has risen substantially over the last five years: from 31% in 2016 to 43% in 2021. The 30 - 49 age group is the worst affected, at 47%. Almost a third of respondents (31%) said they were giving financial support to more people since the beginning of the pandemic, though this figure is slightly down on last year (34%).

Working from home

The pandemic continues to influence how and where people earn a living, with 56% of respondents saying they work from home at least some of the time. Of the 31% working at home all or most of the time, 41% reported having an improved work-life balance compared with before the pandemic, but 22% (about one in five home-based workers) felt that their work-life balance had deteriorated.

Impact of pandemic on income

There has been an improvement from last year on income levels. Last year more than half of the respondents (53%) reported earning less than before the Covid-19 outbreak; this year the figure was 38%. Looking at household income, last year 68% of respondents said their household income was lower than before the pandemic; this year 45% said it was lower.

Income streams

Almost half of respondents (47%) reported having multiple income streams. Dubbed “poly-jobbers”, their extra sources of income take many forms, from side hustles, to second jobs, to extra freelancing or contract work. The trend is highest among younger people: only 23% of people over 50 years of age reported having more than one source of income. “Having a supplementary income is no longer deemed a luxury and it is highly likely that we will continue to see an increase in the number of people who pursue this route as a way to keep afloat in these tough economic times,” Nicholson says.

Savings buffer

Only 36% of respondents said they had enough saved to tide them over for three months or more if they faced retrenchment or a sudden loss of income. This is up from last year's 27%, but still down from the pre-pandemic (2019) figure of 38%. More alarming was that 20% of respondents said they could last less than a month on the money they had. Higher earners (more than R50 000 a month) are more financially secure, but even in this group 25% said they would not make it past a month.

Financial stress and outlook

People are still very stressed financially. Over half (56%) reported feeling “high” or “overwhelming” stress, down only slightly from 58% last year. That said, 61% of respondents felt that things will improve over the next six months, compared with 53% last year. The most optimistic cohort was the 18 - 29 age group: 74% of them had a positive outlook.

Coping strategies

Households have resorted to various strategies in the face of constrained budgets. These range from cost cutting or accessing new credit lines, to simply not paying the bills. The main actions taken were: taking advantage of rewards programmes (69%), dipping into savings (54%), borrowing from friends and family (44%) and letting store card payments lapse (38% of store account holders). Areas in which households have cut expenses (some induced by the lockdowns) include eating out and entertainment (55%), clothing and accessories (36%), travel (31%), alcoholic beverages (23%) and groceries (18%).

Financial priorities

Job and income security was the number-one priority for respondents across all demographics (65% of respondents overall). Then came “cutting expenses wherever I can” (62%), “paying down debt wherever possible” (50%), “building up a financial buffer” (37%), and “making sure my investments are safe” (26%).

But the study also noted a widespread change in mindset: 87% of respondents agreed with the statement “The Covid-19 pandemic has changed how I feel about my money and finances”, and the main reason cited was that they recognised a greater need to save.


People turned in a big way last year to short-term debt to help them through the bad times, and the debt levels have not subsided. In 2019, 19% of respondents reported having a personal loan from a financial institution. That jumped to 43% last year and remains at 43% this year. The second highest source of loans was from a family member or friend (21% of respondents reported having gone this route).

Retirement savings

About three-quarters (73%) of respondents had some form of retirement savings (pension or provident fund or retirement annuity), with the remainder having nothing at all. This figure has not changed much over the last five years, and it is roughly equal between men and women. (See table on respondents’ take-up of financial products across product ranges.)

Just under half (47%) of respondents over 50 years of age said the pandemic had affected their retirement plans, with 16% saying they had had to dip into their retirement savings and 16% saying they had been forced to suspend their retirement fund contributions.


Data collection, like last year, was done online, whereas previously it had been done face-to-face. The sample consisted of 1 530 respondents earning more than R8 000 a month. While the sample itself was as diverse as possible, the data was re-weighted according to the income and demographic profiles of working South Africans aged 18 to 65 years. The research was carried out between May 10 and June 3, 2021.


Share this article: