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Financial fears of South Africans

Feb 04 2013 15:58 Fin24


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Johannesburg – The average middle class South African household spends over R7 000 each month  paying off debt, while more than half of South Africans say they will never be financially free.

This is according to the first annual Wealth Worries Survey, conducted by global payments technology company Visa.

According to Visa, the wealth survey is one of the most comprehensive reports into middle class South Africans and their money.  

“South Africa, and indeed the whole world, has gone through a very tough time over the last few years.

"We wanted to assess attitudes to money, flag areas where people are putting themselves at risk and help people grow and protect their wealth,” said Visa country manager for South Africa Mandy Lamb.

The report surveyed 2 000 people across the country who have household financial decision-making responsibilities. The report was designed to uncover attitudes and behaviour towards money matters and identify areas where South Africans are putting themselves at risk.

Asked whether they would ever be financially free, 52% said no, while 46% considered it feasible. Two percent said they already are.

Of those who think they will one day be financially free, 68% said they would only achieve this after the age of 50.

Almost 30% of respondents said debt levels are the biggest threat to their wealth, with 89% saying they pay on average R7 283 per month to service their debt.

The other threats to their wealth were inflation (19%), the global economy (16%), political uncertainty (14%), employment uncertainty (14%), poor investment returns (5%) and their children (2%).

Interestingly, 60 is the average planned retirement age, but 15% say they will never retire. Thirteen percent say they will retire at 50, while 41% say they will retire at 65 or older.

Eighty seven percent said they would retire in South Africa while 13% favoured retiring abroad, with Europe and the UK the top choices.

Looking at retirement savings, South Africans have various ways of putting money away for their golden years. Sixty four percent of people have their own retirement annuity or provident fund. 

Fifty eight percent have a company retirement fund, 25% have property, 15% are investing in their own businesses and 8% said they put money into unit trusts they have chosen themselves.

Of those saving, the average amount saved each month is R2 699.

When asked what assets they own, 52% of respondents said property, the highest of any asset class.

A whopping 53% said property is the asset that most likely would make them wealthy, with 70% saying they owned one property, 12% two properties and 3% two or more properties.

This was followed by shares and owning your own business, both at 15%, commodities at 8% and private equity investments at 4%.

Alarmingly, 20% of respondents said they had no investments whatsoever, while 19% said they had no retirement savings.

Only 32% of people said they would consult a financial adviser before making investment decisions.

On the bigger picture and South Africa, middle class South Africans are sceptical about the global economy, with 65% saying it will stay the same or get worse over the next five years.

Only 4% think it will make a strong recovery.

Political leadership ranked top at 27% on issues South Africa needs to resolve, followed by job creation (26%), crime (17%,) poverty (13%), education (12%), infrastructure (3%) and better race relations (3%).

Despite the heavy debt burden, the survey also revealed that South Africans are willing to give to those less fortunate than themselves, with 70% saying they give to charity.

And on average those who do so, give an average of R5 843 each year.

Other key findings:

• 71% are planning on leaving an inheritance for their family. Only 2% plan on not leaving any inheritance at all;
•  94% say good education is more important than leaving their children an inheritance; and
•  58% would pay off all their debt if they won R5m.

 - Fin24

*What are the financial worries that cause you most concern? Tell us your story and you could get published.

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