Budget pinch: South Africans reduce Easter charity and travel spending

As South Africans venture into the month of April, characterised by a series of long weekends and school holidays, many are seizing the opportunity to travel and recharge.

However, amidst this seasonal uplift, a notable shift in consumer behaviour is emerging, particularly regarding charitable giving.

According to data from Standard Bank, while April typically sees an increase in charitable donations among clients, the overall proportion of income allocated to such causes has diminished over the past year.

Shené Mothilal, Solution Owner of Digital Money Manager at Standard Bank, emphasised that April is unique, as it is the only month where a significant peak in charitable giving is recorded. Despite this spike, donations still represent less than 1% of total consumer spending.

“Even in this peak month, it is still one of the smaller spend categories for consumers,” Mothilal said.

“When we look at long-term trends, we also see a gradual decline in the proportion of households’ incomes going towards charity and donations since 2022. This decline appears to be driven by the economic challenges that have increasingly burdened South African consumers.”

The economy has been stagnant while the cost of living has surged, leaving many households reassessing their discretionary spending, including charity.

This cautious approach extends beyond donations and touches other spending categories.

Notably, holiday and travel expenditures typically see a surge during the Easter period, although the spending trend appears to be falling behind peak seasons like December to January.

Mothilal points out that while April does bring some increase in travel spending, it remains less significant when compared to other expenditure categories.

“Holiday and travel is also more erratic and is one of the first areas consumers cut back on when financial constraints emerge. Though it hasn’t seen as drastic a decline since 2022 as charity and donations, there is still a palpable drop,” she added.

Conversely, essential expenses are on the rise. Spending on transport and digital connectivity has experienced an uptick in April, attributed partly to annual price increases by service providers.

“Transport and digital connectivity take up a sizeable share of consumer spending,” Mothilal explained.

“As these costs rise, it is reasonable for consumers to reduce spending on non-essential categories.”

The added financial pressure from Easter travel and public transportation fare hikes has further complicated household budgets.

In light of these economic challenges and potential post-Easter debt, Mothilal advised Standard Bank customers to leverage the Future Payments feature available in the bank’s mobile app. This tool allows users to plan for upcoming expenses and account for annual increases in their budgets.

“It’s crucial to be proactive, especially with the VAT increase set to take effect in May,” she warns. “By preparing in advance, consumers can avoid financial pitfalls that may negatively impact their credit score.”

BUSINESS REPORT