Old Mutual Survey highlights urgent need to minimise financial stress
With the cost of living on the rise, it’s not surprising that South Africans continue to suffer from money-related stress, as indicated by the 2018 Old Mutual Savings and Investment Monitor (OMSIM).
It’s also not surprising that the less you earn, the greater your stress. Low earners already struggle to cover day-to-day expenses and are not able to absorb higher prices or unexpected financial expenses.
John Manyike, Head of Financial Education at Old Mutual, points out that low earners (households earning less than R6000 per month) are now spending about 79% of their income on consumption, the highest since the survey started.
But he adds that several other factors also contribute to financial stress levels. “Factors such as lack of financial education and the way you relate to money. There’s no doubt these can also influence the level of financial stress you experience.”
Manyike identifies the three key money personalities and offers tips on what each can do to minimise their financial stress:
THE SPENDER You’re a Spender if your money goes out faster than it comes in, and if you tend to buy things impulsively without budgeting and adequate financial planning. Manyike says this personality type is most prone to financial stress as spending sprees are often followed by regret and the realisation that financial trouble may loom.
The good news is that as a Spender, you don’t have a fear-based relationship with money. As Spenders tend to be spontaneous, you benefit from partnering with a level-headed financial adviser who can help rein you in and ensure your spending is in line with your priorities.
Spenders should also take advantage of reward programmes that reward responsible financial behaviour with tangible incentives such as cash back in your pocket, or vouchers to spend at selected stores. In the current economic climate reward or loyalty programmes could serve as an emergency fund to avoid dipping into credit unnecessarily.
THE OVERCAUTIOUS People with an Overcautious personality are good at all the basics, so you have a solid financial plan, you’re saving and servicing your debt, you stick to your budget and you spend carefully. But despite this, you continue to experience financial stress because of your strong fear of making a mistake. While being cautious about spending is generally a good idea, by shying away from all financial risks, you may miss out on opportunities that could be rewarding in the long term.
If you fall into this category, talk to a financial adviser who can review your financial plan regularly and give you peace of mind that you’re on the right track. Your adviser can also identify which risks (even if conservative) you can consider taking to help you reach your goals sooner. A reward programme that rewards all the good financial decisions you make may also help you to relax a little.
THE SAVVY ONE If your money personality type is Savvy, you have a solid financial plan that you follow closely, but you also know that some degree of flexibility and some calculated risks are a part of the process of wealth creation. You are not afraid to stretch outside your comfort zone to find opportunities for growth.
As a Savvy person, you’re less prone to financial stress. When times are tough, you use technology such as the money management app, 22seven, to see where the problem is, and then you take action, like adjusting your budget or contacting their financial adviser for useful insights.
For Savvy individuals, reward programmes are a key ingredient. You know how to make reward programmes work for you – taking advantage of discounts, special offers and free advice as well as all the tools available to help you reach financial freedom.