The impact of sound budgeting habits on personal finance outcomes in South Africa

Suboptimal budgeting practices are a significant determinant of poor financial outcomes. This study investigates the longitudinal relationship between sound budgeting habits and key personal financial outcomes, namely, savings, credit scores, financial well-being, and financial stress, within the South African context. A quantitative, longitudinal survey design was employed using data from a large national sample of Old Mutual Rewards members (N > 1.3 million) collected over a three-year period (2019–2021), spanning pre-, during, and post-Covid-19 phases. Budgeting habits and financial outcomes were measured using validated multi-item instruments, while credit scores were obtained from reputable bureaus (TransUnion and Experian). Analytical techniques included Spearman’s rank-order correlations, repeated-measures ANOVA, and chi-square tests, conducted using IBM SPSS v28. Results revealed that stronger budgeting habits were consistently and significantly associated with improved savings behavior, higher credit scores, enhanced financial well-being, and lower financial stress across all time periods. These findings underscore the critical role of budgeting in promoting financial health, particularly under economic uncertainty. This study deepens understanding of the behavioral drivers of budgeting practices in developing countries, providing long-term insights from South Africa on how sticking to a budget can shape financial outcomes during times of economic upheaval.