South Africans are stressing out about money – and don’t know what to do
Most South Africans are unhappy about their current financial situation, with many concerned about their ability to overcome budgetary hurdles.
This is according to the first-ever Sanlam Financial Confidence Index, which surveyed 1,500 respondents and looked at three key behavioural finance indicators to assess their financial confidence: financial determination, financial resistance and financial well-being.
A key finding in the survey is that a large portion of South Africans are disappointed with their financial circumstances, and many feel like they do not have the knowledge to tackle these issues effectively.
“Financial confidence is the level of assurance and belief in one’s ability to manage and navigate their financial lives effectively,” said Mariska Oosthuizen, Chief Marketing Officer for Sanlam.
“Personal finances have a profound impact on human behaviour, influencing decision-making, lifestyle choices, relationships, and overall well-being. When individuals are financially confident, they are more inclined to experience a higher level of overall happiness and satisfaction.”
Although Oosthuizen acknowledged that the country’s challenging economic environment could influence the findings, the financial acumen of the individual cannot be ignored.
“Benchmarking the level of financial confidence of South Africans is vital when driving financial education and empowerment initiatives. The public and private sector need to collectively work towards equipping individuals with the necessary tools to build financial confidence,” she added.
Key highlights from the survey include:
- Only 17% don’t experience unhappiness regarding their current financial circumstances.
- Only 35% of respondents trust their financial abilities.
- Individuals aged 40 to 60 exhibit the lowest self-trust levels.
- 57% feel confident identifying suitable financial products.
- 67% exhibit courage in negotiating financial matters.
- 52% have access to credit, and an equivalent percentage rely on friends and family for financial support.
- Only 34% possess insurance coverage for unforeseen financial risks.
- A mere 33% don’t feel embarrassed about their childhood financial situations.
Analysis
Sanlam noted that the lowest levels of self-trust were reported among individuals between 40 and 60 years old.
“This highlights the need for far greater levels of financial education and advice in order to build self-trust,” Sipho Mncwabe, Head of Adviser Transformation at Sanlam, said.
“South Africans have multiple avenues available for boosting their financial management abilities, such as reading materials from dependable sources and engaging a reliable financial adviser.”
Although there is a lack of self-trust in their financial abilities, 57% of respondents said they feel confident in identifying appropriate financial products for their needs.
This sentiment was, however, slightly lower for individuals aged 40 and above, suggesting another generational gap in financial literacy.
On the other hand, younger age groups seem to demonstrate greater confidence and self-trust in determining their financial situation. However, Sanlam said that this age-based disparity in confidence can also be due to differing life stages as opposed to a skill deficiency.
Looking more positively, the survey said that 67% of South Africans have the courage to negotiate prices and repayment terms, signalling that there is an assertiveness for many to manage their financial situations effectively – or a necessity-based negotiation due to the economic environment.
Another encouraging trend is the eagerness of nearly 70% of respondents to upskill themselves to boost their earning power.
When it comes to relying on others, the survey said that 52% of people could rely on credit, while 52% also said that they could rely on friends and families for financial support.
In addition, informal networks are seen as necessary for acquiring financial insights, with 43% of respondents feeling they can rely on their social circles for financial insights.
However, only 34% of respondents said they had insurance products to cover their financial risks, which could lead to unexpected hardships.
The study also looked at financial well-being, with only 33% not feeling upset or embarrassed about their financial situation growing up.
Only 17% did not feel unhappy about their current financial state, with feelings of stress, discomfort and hopelessness common among respondents.
Loading ...