Whilst I always view clients within their unique situation and tailor their financial plans to their needs and goals, part of knowing how to guide them involves an awareness of current trends and the economic landscape. One of these measures is found in the Old Mutual Savings & Investment Monitor that was published in early August 2014.

Essentially, this survey asks the question: ‘Are you financially comfortable?’

They looked at households from metropolitan areas that were earning an income.

This creates a picture for us of the ‘reality’ of how people are feeling about their financial comfort and it forms a baseline for how one might approach a financial plan in terms of the surrounding influences and perceptions.

Other facets of the survey report show signs of increasing debt, and tougher times for households. While South African households’ net wealth increased by 9.9% on a quarter-over-quarter seasonally adjusted and annualised basis during Q1 2014, disposable income of households and net wealth is increasing at a slower pace.

An additional pressure comes in with the servicing costs of household debt that have increased. Household arrears on credit have also increased this year, rising by 6.3% in the first three months of the 2014.

What are people saving for?
The survey also shows us which investment an assurance products have increased. Pension, provident funds, informal savings, life assurances and disability products have shown an improvement whilst there is an overall decline of savings in banked and and unbanked cash savings, and education policies.

Retirement savings
A great sign is that, overall, there are fewer people who have neither a pension/provident fund or an RA.

In the high net worth market – those earning R80 000 a month and up – 99% have an RA, and 56% have a pension or provident fund (there are likely to be more self-employed individuals in this segment).

Of all households surveyed, 39% expect to be dependent on their children when they are old, and 32% expect government to look after them. 46% of baby boomers expect to be dependent on their children, and 43% of generation X (Born between 1965 and 1979). 7% of the high net worth market (R80K+) believe their children should look after them when they are old.

Are you confident in your financial decisions?
These figures show that income-earning individuals are growing in confidence around managing their money in a sustainable way that creates provision for future needs and circumstances.

How are you feeling about your situation? If you feel like hooking up for a chat or a cup of coffee to review your portfolio, then let us know!

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