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Middle-Income South Africans Are Spending Their Entire Salaries In 5 Days Or Less

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Nobody gets a kick out of receiving multiple debit order SMS’s at month-end. Many ignore these notifications as it can be painful and depressing to watch your balance decreasing at a rapid rate. We all have expenses and finances we need to manage, but many budgets go household mismanaged and often disregarded.

Cape Business News reports:

More than half (56%) of middle-income consumers in South Africa spend their entire monthly salary in five days or less after receiving it.

This is according to data from FNB’s Retail segment which categorises middle-income consumers as those who earn a gross monthly income of between R7,000 up to R60,000.

What Are Consumers Doing After Day 5?

This figure is shocking. What it means is that the majority of middle-income consumers are using debt to plug the gaps. Once their salaries run out, they switch to personal loans, store cards and credit cards. This is a vicious monthly cycle which gets repeated every payday.

“For many consumers it’s not only a matter of living from one salary payment to another, the reality is that their monthly salary just doesn’t last for 30 days,” said Raj Makanjee, CEO of FNB Retail.

“These consumers tend to struggle with money management, with the shortfall leading to sacrifices in important areas such as having back up or emergency saving that can be used to pay for unforeseen expenses. High spending and limited savings cause consumers to rely on credit to get through the month, making them more vulnerable to be caught in a debt trap,” he said.

Taking Out Debt For Living Expenses Is A Dangerous Exercise

All forms of debt come with interest rates and fees. These are included in the monthly debt repayments. What this means is that every new loan or credit card purchase comes with extra costs. These get added onto the bottom line of your monthly expenses. Basically, each month, your expenses climb even higher due to the cost of these debts.

If you are looking to consolidate your debts or need any other financial assistance, speak to one of our experts. Vantage Debt Management can assist by consolidating your monthly payments, reducing your interest rates and offering legal protection from your credit providers.

 

{Source: Cape Business News}

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