Covid’s financial hangover eases

A staggering 94% of those surveyed in a recent Debt Rescue study experienced a cash shortage during the past year.

This could be due to changing work statuses.

A noteworthy 34% lost their jobs, contributing to South Africa’s unemployment rate breaking through the 32% ceiling, with 22% being retrenched and 17% receiving a pay cut.

The results are based on feedback from 1 300 South Africans who were polled online in March and April.

“While there is a definite uptick both sentimentally and economically, thanks in part to a rebound in commercial activity and the absence of a third wave following the Easter holidays, consumers are still feeling the hangover of the pandemic on their financial standing,” said Debt Rescue CEO Neil Roets.

To help cope financially, of those who dipped into their bond or savings, 36% used the funds to pay for day-to-day living expenses, while 30% turned to family and friends for help, while 10% sold some of their assets.

He said the silver lining, if one can call it that, of Covid-19’s impact is that the majority (83%) of those surveyed have initiated a conversation with their family about money management in the past year, while 61% have put a money plan in place.

“Bad times lead to a change in behaviour, and we can see from our study that consumers are taking financial responsibility, given that 44% said they have become more aware of their spending habits while 29% are trying to reduce the amount of debt they have,” said Roets.

While consumers try to manage their financial situations and lifestyles better, the broader economic context is not necessarily rosy. Petrol increased by a massive R1 a litre, diesel by 66c and illuminating paraffin by 37c in April.

This has created a knock-on effect on the cost of food and other goods that are reliant on transport. Commuting costs similarly increased. Eskom had to raise fees by as much as 15% last month as a result of the Joburg High Court ordering that an amount of R10-billion be added to Eskom’s allowable revenue to be recovered from tariff customers in the 2021/22 financial year.

Inflation also increased in March to 3.2% and is likely to increase further.

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