August 22, 2023

South Africans are Cutting Costs to Make Ends Meet

South Africans cutting expenses

It’s been a rough few years for South Africans, and consumers are having to find new ways to cut expenses to make it every month.

With prices of everything continuously increasing since late 2021, more SA residents are struggling to keep their heads above water.

The latest data by Old Mutual reveals that most South Africans are sacrificing large expenses to make ends meet. But what will be the consequences?

Cutting monthly costs

The findings in the 2023 Old Mutual Savings and Investment Monitor (OMSIM) research report show that about 53% of respondents don’t have enough funds to cover any unexpected circumstances. While a whopping 62% don’t have any savings as a buffer should they have no means of an income.

The group took a closer look at the financial attitude and behavioural changes among the South African working class.

An interview with 1,505 respondents of varying ages shows that many consumers focus on reducing costs and trimming monthly premiums.

Read: A debt reduction strategy that works

The participants have shown resilience in the sense that they are continuously looking at ways to stretch their budget.

South Africans have made several moves to cut back on their monthly expenses, including increased use of Rewards and Loyalty programs. The use of loyalty programs has risen from 66% (2022) to 70% in 2023.

Furthermore, 40% of participants switched to cheaper TV streaming options, and 36% moved to cheaper supermarket brands. About 33% of South Africans say they’ve stopped relying on domestic help, and 29% have moved over to more affordable data and cellphone options.

Major purchases have been put on hold by 29%, while 27% have put an end to their gym memberships, and another 21% are opting for repairs rather than replacements of appliances.

More stats show that 13% are downgrading their rented properties, and 11% are moving kids over to schools that are less expensive.

According to the Head of Knowledge and Insights at Old Mutual, Vuyokazi Mabude, the majority are opting to prioritise retirement savings, paying off debt, and building emergency buffers despite the current financial pressure.

The rise of the ‘poly jobber’

Another way in which South Africans are aiming to reduce the cost of expenses is to take on additional jobs. The extra boost to household income is the only way some can make monthly payments on debt and handle expenses.

According to the stats, poly jobbers make up 50% of the SA workforce. What is a poly jobber? This is someone who has one fixed income stream and then adds one or more extra income streams, which may fluctuate.

Poly jobbers include young workers ranging from ages 18 to 29 years old. The study reveals that the number of young poly jobbers has increased from 60% (2022) to 70% in 2023. Many younger participants use social media as an additional means of income.

Read: Financial tips for young people

Then there are South Africans who have instead opted for riskier ways to increase their income. Stats reveal that there has been a 5% increase in online gambling from 2022’s 44% to 49% in 2023. The numbers on risk-inclined people will remain stable in 2023. However, the number of financial risk-takers has dropped to 21% from last year’s 23%.

Above-average risk takers have also dropped from 28% in 2022 to 27% in 2023. Average risk takers have grown from 31% (2022) to 36% (2023), and 16% were completely unwilling to take any financial risks.

Getting out of debt

For many South Africans, debt is an everyday reality, but that doesn’t mean it has to stay that way.

Debtline is an NCR-registered debt counselling firm that aims to assist those struggling to get debt-free. We give you access to professional counsellors that can assist with expert advice. They’ll also negotiate debt repayments on your behalf and provide protection while you’re under Debt Review.

If you’re in need of professional assistance, you can contact the Debtline team for a free callback by filling in the form on the website.