The influence of life stages on the usage of financial products by South African households

Abstract

South Africa has a well developed financial market providing savers with numerous financial products of which the household’s usage of these products forms the focus of this exploratory study. The first phase of the study used Lindqvist’s saving motives hierarchy as a basis to develop a financial product usage hierarchy. Products used by South African households were then classified into four levels as per the hierarchy. Ando and Modigliani’s life-cycle hypothesis was used to determine if life stages have an impact on the financial products used for each of the levels. The descriptive analyses were complemented by a product usage rating index. The index confirmed the findings of the descriptive analyses namely, that life stages do influence the usage of financial products. “At-home singles” were identified as the group with the lowest usage of financial products for all four saving product hierarchy levels. The product usage rating index found that “Young couples” had the highest usage levels for both cash management products (level 1) and basic savings products (level 3). “Mature families” had the highest ranking in the product usage rating index for precautionary products (level 2) and wealth management products (level 4).