Consumers taking proactive, long-term approach to their financial health – study

A recent study by TransUnion shows that consumers are optimistic about their finances for the next 12 months with more participants saving for emergencies or putting money into a stokvel.

At 72%, this was the highest percentage ever measured for financial optimism since the study started tracking this in the fourth quarter of 2020, TransUnion stated. The study was done in the first quarter of 2024 and there were 11,488 participants.

“When it comes to savings, 19% of respondents put more into their retirement funding in the past three months, and 28% saved more in an emergency fund or stokvel. These numbers are higher than in fourth quarter of 2023, when 18% boosted their retirement funds and 25% put money into savings and stokvels,” the study found.

TransUnion Africa CEO Lee Naik says this showed that participants were taking a proactive, long-term approach to their financial health.

“In addition to a feeling of overall buoyancy, the results show that consumers are responding responsibly to the prevailing macroeconomic factors by prioritising the repayment of existing debt and saving more for both the short- and long-term.

“Consumers’ appetite for new credit facilities is the highest we’ve seen it since fourth quarter of 2020."

The study further shows that almost two-thirds (65%) of the participating households were confident that they would be able to meet their current bills and loan obligations in the coming three months.

“The percentage of households that expect to struggle to pay their bills and loans (35%) is seven percentage points lower than in the fourth quarter (42%) and, of these, 34% plan to pay a partial amount that they can afford, 33% plan to take on partial or gig work and 30% plan to use money from savings to help meet their financial responsibilities.

“Lenders can also expect requests from 12% of this group of borrowers to refinance or renegotiate their current debt payment periods and/or interest rates,” the study showed.

“In all, 37% of respondents who said that the South African economy is in a recession are committed to paying down debt faster, compared to 29% in the fourth quarter, and 51% (up from 47% in the fourth quarter) are cutting back on discretionary spending to be able to do so.

At least 38% of the respondents indicated that they planned to “apply for new credit or refinance existing credit such as property and car finance, credit cards and personal and student loans, within the next year”.

“Further, there is a shift towards looking past the current environment to the long-term, which will be welcomed by the residential property sector, with 21% of respondents planning to apply for a new bond facility.”

Participants (20%) have added to their home-based digital services over the preceding quarter, transacting digitally is becoming even more commonplace.

“However, an alarming number (60%) of South Africans were targeted by an online, email, phone call or text messaging fraud scheme, with 9% falling victim over the same period,” the study found.

TransUnion said it was important for consumers to monitor their credit records regularly to enable early detection of fraudulent activities before they affect your credit score.