April Budget Squeeze

With several long weekends, school holidays, and first-quarter fatigue setting in, South Africans seem to be taking time off in April to travel. Consumers also become a little more generous around this time – but not as much as before.

Standard Bank data shows an uptick in spending on donations and charity in April – the only month in the year where a noticeable peak in charitable giving is observed among Standard Bank clients. Still, donations account for less than 1% of their total spend.

“Even in this peak month, it is still one of the smaller spend categories for consumers,” says Shené Mothilal, Solution Owner of Digital Money Manager at Standard Bank.

“When we look at a long-term trend, we also see a gradual decline in the proportion of households’ incomes going towards charity and donations since 2022, which is possibly a function of the economic hardships consumers have faced in recent years as our economy has remained stagnant while the cost of living rapidly escalated over that period,” she adds.

These economic pressures are also showing up in spending categories that once saw higher activity. Holiday and Travel, for example, tends to see a spike in spending around March and April, although December to January remains the peak period for this category.

“Even with that seasonal increase, Holiday and Travel remains one of the smaller spend categories for consumers,” says Mothilal. “It’s also more erratic, likely because it’s one of the easiest areas to cut back on when money is tight. That said, the decline in Holiday and Travel spend since 2022 hasn’t been as steep as what we’ve seen with Charity and Donations.”

In contrast, spending on essential items like transport and digital connectivity tends to rise in April, as service providers usually implement annual price increases during this time. While part of the increase in transport spend can be linked to road travel over Easter, Mothilal notes that annual fare hikes for public transport could also play a role.

“Transport and Digital Connectivity take up a sizeable share of consumer spending,” she explains. “So, when prices go up, it makes sense that people cut back on other non-essential categories that were once more popular.”

To avoid falling into post-Easter debt, Mothilal encourages Standard Bank customers to use the Future Payments feature on the mobile banking app to stay ahead of upcoming expenses and factor annual increases into their budgets. She also reminds consumers to factor increases resulting from VAT increase in May. “This helps ensure you’re not caught off-guard or left short when those payments go off your account, which can also have a negative impact on your credit score” adds Mothilal.