Consumers crave a return to material pleasure

(Shutterstock)
(Shutterstock)
Cape Town - From a global perspective the recession post 2008 had forced many individuals to reassess their spending habits, cut back and get by, but research suggests they are craving a return to a life of pleasure and aspiration.

Almost 600 working individuals between the ages of 20 and 65 were polled in South Africa, the UK, the US, Hong Kong, France, Spain, Germany and the UAE.

More than two thirds of them said they believe that their spending will increase in 2014, revealed the new poll by deVere Group, an independent financial advisory organisation.

"We believe the survey suggests that, whilst salaries have remained fairly stagnant, people crave to return to a life of material pleasure and aspiration," Brett Taylor, senior area manager of the deVere Group Southern Africa told Fin24.

"We’re seeing a rise of both the African and South African middle class. Their increased spending power is likely to be directed towards non-essential items."

He said it would be crass to suggest that non-essential items would be anything other than bread, water, clothes and shelter.

This is because computers, cell phones and cars have become an integral part of society and business.

"Putting a portion of income aside for retirement as early as possible should certainly fall into the essential column," he said.

Non-essentials

"Non-essentials are the high-end brands, dining out or the very latest technology. Non-essentials are the things we could do fine without, but we still want."

Taylor said SA consumers should take the time to build a sensible financial plan, either on their own or with an expert.

"List both the essentials and non-essentials and budget against household income. Cut out as many non-essentials as possible and have the strength and discipline to maintain it," he said.

"Review how much you’re saving regularly. Saving is both sensible and addictive."

The survey highlights that, in general, people have a growing sense of financial confidence," said Taylor.

It is a sentiment that is echoed by the World Bank, which recently increased its forecast for global growth for the first time in three years.

“It is this building momentum in confidence that is the probable driving force behind the expected increase in spending on things such as holidays, designer clothes and eating out in 2014,” he said.

Extra consumption

“Should the extra consumption be short-term and should it lead to real growth, that is reasonable, but it is not a viable longer-term strategy for individuals or economies."

That is because most people are not suddenly earning higher salaries, yet spending on non-essentials is expected to rise.

This suggests that many people will fall back into pre-crash ways of running down their savings, or reducing the money they put aside each month, to fund spending.

“The live-for-today attitude is all very well, but it comes at a potentially heavy price. For instance, most financially-savvy people who want to enjoy a fulfilling, active retirement know that relying on the state pension is not an option," said Taylor.

“Typically, the earlier you start saving, the easier it is to reach your retirement objective. The truth is if we spend more now, we’ll need to save more in the medium and longer term, or carry on working longer than we had anticipated.”

- Fin24

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