Where Are South Africans Spending Their Money?

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Spending trends might not be the immediate point of interest for most, but it’s these trends that can help governments, retailers and financial institutions alike all work out just what they need to focus on to cater to consumer demand.

In South Africa, spending habits truly differ dependant on the level of income any one person or family has. As a result, businesses and the government need to pay attention to these differing trends in order to further monitor and adjust their own activity to suit.

The Average Spending Trends

While different incomes do hold different trends, there are some that are universal across most incomes. According to Stats SA, on average a South African household will generally consist of three to four people and have an income of R138,268 per year, with an annual expenditure of R103,293. With that in mind, we’re exploring what exactly this money goes on:

  • Housing

With an average of 32.55 percent of household expenditure going onto housing, water, electricity, gas and other essentials, this tends to be the highest outgoing cost for families rich or poor. However, trends have also seen that the richest in the country tend to spend the highest percentage of their income on housing and bills overall. This could be due to a more relaxed approach to spending what they have, or simply because a more lavish lifestyle calls for higher spending on these essentials.

  • Transport

The costs of getting from A to B are another area that South African families are spending on, with 16.29 percent of their spending going on transport. Poorer families tend to spend this money on public transport, however, while richer or more stable middle-class families tend to buy private cars or be more inclined to using cabs where possible which is where their expenditure goes. Regardless, of total expenditure, transport takes second place in percentage of income after Housing.

  • Entertainment

While entertainment isn’t the next highest percentage, what is interesting about this trend is that it sits higher than education in spending priority. This can include restaurants, hotels, casino spending, theatres and more and so, as you might expect, it’s quite a broad category. Even more interestingly, it’s actually the poorer of households that spend the most on this category, and though it’s unclear as to why this is, the accessibility of entertainment online is making it much easier for all types of people to spend on fun.

The Rich

As you may expect, those with more money to spend are more likely to spend it and often aren’t afraid to splash out on luxury purchases. As a result, their spending trends tend to be very different to those of less well-off families. From hotel stays to lavish branded buys, here are the spending trends of South Africa’s richest:

  • Hotels

While hotel stays are a big expenditure for the travelling rich, it’s actually the act of purchasing villas and apartments within hotels that allow the owner to essentially live there permanently with all the services that an average visitor would get. Examples of this would be 70 on Melville in Illovo, Johannesburg, Amalfi in Mouille Point, Cape Town and even Melrose Arch in Melrose, Johannesburg. The ability to move into a hotel is not only one that appeals to South African citizens, but to multimillionaire travellers too, which does account for a fair amount of this spending.

  • Brands

Branded items like clothing, watches, toiletries and more are classed as luxuries to most of us but for those with a little extra income to spare, they can become recurring purchases with ease – and this is what has happened in South Africa. Brands like Hugo Boss, Lacoste and L’Occitane are the most common, though Burberry, Louis Vuitton and Gucci certainly aren’t far behind.

Low-Income Families

For those on a low income, there is one particular trend worth noting, and that is their spending on food. Above all else, most poor families within South Africa are spending much of their income on food for their families and this is particularly rife around the holiday season. 30 percent of income expenditure can go on food in some of the poorest households, with just 10.5 percent going on the same in richer families. This is likely simply a matter of scale. For the same amount of food, poorer families will need to use more of their income, while richer families will have more to spare.

South Africa’s investment and spending habits tend to lean more towards what is needed than what they want to spend on, even in the richest families. Household costs, food, and the price of transport often make up the top three spending categories for South Africans, showing that most of the spending in SA tends to be of the practical variety.

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