New research published by financial services group, Old Mutual, shows how many South Africans are adequately prepared for a financial crisis.
The survey revealed that half of the households covered would be able to find money to cover R1,000 in unforeseen expenses, while only a quarter could manage R5,000, with the rest turning to debt accrual.
Alarmingly, however, one third of the households said they could not even borrow enough money to cover R10,000 in unforeseen costs.
Broken down further, for those households earning between R6,000 to R19,999 57% would need to borrow the funds to cover a R10,000 shock, while for those households earning between R20,000 to R39,000, the percentage drops to just under half.
According to financial services firm, Alexander Forbes, what the numbers suggest, is that there’s a disturbing number of employees in the country that are ‘just one destabilising shock away from hardship’. The lower the income, the more pronounced the hardship is likely to be.
Ability to handle expenditure – R6,000 to R19,999 monthly household income
|Pay with a credit card||7%||6%||3%|
|Borrow from friend/family||31%||17%||2%|
|Borrow from my stokvel||8%||9%||4%|
|Could not handle it||0%||5%||30%|
|Will have to borrow||42%||52%||57%|
Ability to handle expenditure – R20,000 to R39,000 monthly income
|Borrow from friend/family||12%||12%||9%|
|Borrow from my stokvel||5%||8%||5%|
|Would not be able to cover it||0%||2%||11%|
|Will have to borrow||18%||31%||48%|
Alexander Forbes noted that a US survey showed that 47% of Americans would be unable to pay for a $400 emergency without borrowing or selling something.
Source: Business Tech