Abstract:
The WHO (World Health Organisation) declared COVID-19 a global pandemic in mid-March 2020. To curb the spread of the virus, many countries, South Africa included, implemented lockdowns which restricted people’s movement and limited economic activity. As a result, South African household earnings decreased by 30% in 2020, with incomes of lower educated households decreasing by approximately 40%. As a result of the financial impact, many households had to reprioritise their budgets, decreasing the amount available in specific budget categories but increasing amounts in others, such as preventative OTC medication and general medical expenses, which became a priority. This study aims to explore how households reprioritised their budgets to deal with the predicament of COVID-19 financial disruptions and increased health-related expenses using mental accounting as a theoretical framework. This study used a mono-method, quantitative research approach following a positivist research philosophy, using a descripto-explanatory strategy within a cross-sectional time-horizon. Data was collected by means of an electronic survey that made use of Likert-type scales to facilitate ease of completion on handheld devices. The results demonstrate that financial disruptions caused by the pandemic negatively impacted all income groups and further indicated that households prioritised medical related expenses as essential items on their budget. Households that were members of a medical aid were more inclined to increase budget amounts allocated towards preventative healthcare such as OTC medication and supplements, compared to households with no medical aid to support them. Finally, it was observed that COVID-19 has altered South Africans’ perceptions of budgeting, with indications that the pandemic has driven them to be more cautious with future spending, and more conservative with future budgeting behaviour.
