CEO of FNB’s Money Management unit, Doret Jooste, said: “Over the last year, our stats showed that more than half of middle income consumers spend their income in less than five days after receiving it.”
This means that middle-income consumers in South Africa are heavily reliant on debt, with some using as much as 25% of their monthly income to pay interest on debt.
A survey published by World Wide Worx, and commissioned by TymeBank, showed that while many South Africans have a monthly budget, 76% still run out of money before the end of the month.
The survey found that 43% of people borrow money to get through the rest of the month after they run out. Only 9% of those surveyed turn to banks to help them make it through the month, 20% use credit cards and 59% resort to borrowing money from family and friends.
What are people spending their money on:
- 41% housing
- 24% groceries
- 10% transport costs
- 8% school fees
- Other: clothing and security
However, despite day-to-day financial realities, 43% of respondents are actively saving towards their financial goals.
The most common goal, especially for those under 35, is to save up for a car (19%) and to study or learn a new skill (19%). One in 10 intend to start or grow a business and 9% want to buy or renovate a home, the survey found.
When it comes to saving money every month, Old Mutual’s data shows that irrespective of household income, people are now looking how to cut back on the basics – with cheaper food and clothing topping the list.
Households are also cutting back on entertainment and entertaining, reducing how often they go out, or have friends and family over for a social gathering.
Source: Business Tech