Too many of us are fixated with 'keeping up with the Joneses' - Times LIVE
Mon May 29 19:02:07 SAST 2017

Too many of us are fixated with 'keeping up with the Joneses'

The Editor, The Times Newspaper | 2012-04-20 00:03:10.0

The Times Editorial: The latest survey on the state of South Africans' financial wellbeing paints a depressing picture. More than half of the country's households are living beyond their means and have taken on way too much debt as a consequence, according to a household "financial wellness" index released yesterday by Unisa's Bureau of Market Research in collaboration with financial services firm Momentum.

The research revealed that about 4.8% of households are mired in debt that they are not able to escape from unassisted while a further 48.5% are financially unstable.

About 30.5% of households are in a more sound financial position, while the remaining 16.2% have no debt.

The findings seem to support earlier research - in January the National Credit Regulator disclosed that 8.83million of the country's 19.1million credit-active consumers had impaired records at the end of September 2011.

According to the Momentum study, among the reasons for the soaring debt levels are poor financial planning, higher inflation and a gradual increase in taxes.

A significant finding of the research was that financial wellbeing "improves drastically when the household possesses a higher level of education", but it also emerged that many middle-class and poorer households are fixated with "keeping up with the Joneses" and buy luxury items they cannot afford, such as new cars, instead of investing in fixed property.

A major concern is that many indebted people are still managing to source additional unsecured loans to service existing debt.

This suggests that lenders are finding loopholes to circumvent the National Credit Act which aims, among others things, to curb reckless lending to protect consumers.

Our financial authorities would do well to investigate whether the act needs to be tightened up.

Equally, breadwinners should take responsibility for their finances to ensure their families do not become over-indebted.


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