The minister mentioned a taxable increase between 18% and 45% among other things, meaning that the net household income will reduce by a few hundreds, if not thousands of rands. For youth this could mean a reduction in pocket money, or that their parents would tighten their monthly budgets to keep their children’s pocket money at a consistent rate. “However, we predict that it won’t necessarily affect youth’s spending power negatively,” said Catherine Bothma, Managing Director of HDI Youth Marketeers.
According to the 2016 Sunday Times Generation Next
survey, the largest youth brand preference study run by HDI Youth Marketeers, the South African youth, aged 8-23, have an annual direct spend of over R134.2 billion. Although fuel levies, food and personal tax increase with each budget, this amount has been steadily increasing each year since the study’s inception in 2004. Since then, the study has seen the annual spend go over the R110bn mark, with it reaching R111.3bn (in 2014), growing to R120.5bn in 2015. According to Bothma, the youth spend is predicted to increase by over 10% in the 2017 survey – this could be influenced by a number of factors.
Bothma says, “You’re probably asking yourself, how on earth young people have access to this amount of spending money and what could they possibly be buying with it?”
It is recorded in the study that the top five things that youth spend their money on is clothing (23%); education (15%); transport (9%); games (8%) and toiletries (6%). “It’s without a doubt that personal image plays an important role in the lives of young people, as clothing scored quite high across the kids, teens and young adults categories,” said Bothma. She further added that government’s allocation to education was a good move, as that would put less pressure on youth’s spend towards their education.
When they aren’t spending their own money, they have what’s called “pester power” – the power to influence their parents’ purchases. Young people have an immense influence, 88% to be exact, on clothing purchases by parents, 80% of cellphone purchases, 78% of fun places to go and 74% of which fast food place to eat out at, but Bothma says that we can expect to see these figures tighten in this year’s study.
In essence, although the budget speech received mixed emotions, HDI predicts that it won’t have a negative impact on the annual youth spend. We will still see the annual youth spend increase, but with caution. Youth are going to spend more of their money on inexpensive items. That gives brands that are already catering to their pockets a big thumbs-up!