Guiding consumers since 2009

Socio-economic factors have a big impact on SA

By Staff Writer
Finmark Forum's most recent its Consumer Financial Vulnerability Index (CFVI), which was released on Thursday last week, reports that consumers have been hit hardest by price increases, job losses and even the socio-economic impact HIV/Aids.

People who fall in the R30 0000 to R100 000 a year income bracket, were the most vulnerable according to the survey.

"Although the rate of job losses declined towards the end of 2009 and in the first quarter of 2010, the number of people losing jobs is putting more consumers at risk," Finmark Forum said.

As the cost of living continues to skyrocket, some consumers are forced to pay off their debt over a longer period of time, resulting in higher interest while others had to cancel life policies just to make ends meet.

"Other indications of continued financial stress are the increasing number of consumers making arrangements to pay off their debt over a longer period or cancelling policies to cover household expenditures."

The good news is that the overall vulnerability of consumers did lessen during the first quarter of 2010 but the outlook for the future is not so good.

"The results indicate that consumer financial vulnerability, after first increasing in the third quarter of 2009, has now declined for two consecutive quarters as the economy picked up momentum and consumers adapted their lifestyles downwards."

"These include high levels of unemployment and poverty, low skills levels, low labour market absorption rates, high levels of indebtedness and defaults on repayments, ineffective service delivery, and the impact of HIV and Aids."

Some 70% of key informants said that the income situation of South Africans did not improve during 2009 and 65% said that the ability of consumers to service their debt did not improve. In addition, 60% indicated that consumers' ability to make ends meet did not improve during 2009. Given that nearly half the population are poor, this is serious and 61% of key informants said that the ability of consumers to save did not improve.

A total of 91% of key informants agreed that an increasing number of consumers cannot keep up with payment on financial obligations, 85% indicated that a growing number of consumers are in arrears on their accounts for three months or more and 96% said that an increasing number of consumers are making arrangements to pay off their debts over a longer period of time.

Key informants were asked to indicate the main reasons for the bad financial situation of consumers. The major reasons found were firstly, over indebtedness, secondly, consumers spending more than they earn, thirdly, bad financial planning, fourthly, job losses and, fifthly, not having sufficient savings to draw on.

 

Recent Articles

Featured It’s possible to change your marriage regime

Many people wed before they sign an antenuptial contract (ANC). This is especially practiced by people in customary marriages and those not clued up about the ANC. The law says if there’s no ANC before the wedding takes place, the marriage will automatically be in Community of Property. 

Keep this in mind when taking out new financial products

Adding a product to your personal finance portfolio, such as insurance or an investment, is a big decision. We found out what you should keep in mind before taking out a new product, how you can assess the products you already have, and how you can generally improve your financial position.

Are you in debt denial?

With debt levels increasing at 13% more than income levels, South Africans are more debt-stressed now than arguably ever before. This is iterated by the National Credit Regulator’s (NCR) report that nearly half of credit-active consumers in South Africa have damaged credit records. However, only a few seek the necessary help.

Why should you invest in a mutual bank?

Often when people think about banking, they always think about commercial banks. Mutual banks hardly come to mind, but these banks offer investment opportunities that are often overlooked.

 

Deals

Aurora Spa 100-minute Treatment Special

Price: R449
When: Until 31 March
Where: Century City

Woodstock Grill and Tap Steak Thursdays

Price: R100
When: Thursdays
Where: Woodstock

KFC 5+5 Special

Price: R65
When: Until 25 February 2020
Where: Nationwide