Middle-class South Africans are spending their salaries in five days. In a recent article published by BusinessTech, FNB estimates that it takes an average of five days for a middle-income consumer to spend up to 80% of their monthly salary. 

This suggests that the average middle-income consumer, earning between R180,000 – R500,000 per annum, survives on 20% of their monthly salary, for more than 20 days in a month.

According to the BusinessTech article, CEO of FNB Retail, Raj Makanjee says this is one of the indications that the average consumer is stretched financially. He further stated, “The trend also points to a continued culture of consumption, leaving consumers with little to start saving and investing for financial independence,”.

Turning To Credit 

Recent data suggest that South African consumers have been turning to credit cards and personal loans to make it through the month. Food and petrol prices reach an all-time high, while salaries remain the same. South Africa’s rising inflation rates and stagnant incomes have created the perfect storm for surging debt as more consumers turn to credit cards and personal loans to make it through the month. 

The article also noted that salaried middle-income consumers with secured and unsecured credit spend 30% of their income on credit. 

With The Reserve Bank increasing interest rates, these are worrying times for most middle-class earners in South Africa. The South African Reserve Bank has announced that the repo rate had been increased by 50 basis points. 

Increasing Costs

These are worrying stats that show consumers may turn to credit to meet their living expenses to survive. Debt exposure has increased for South Africans across almost all income groups. Salaries have generally not kept up with inflation in the past. Thus, the middle class has been squeezed over the last couple of years. Very few inflation adjustments are seen for many of the middle-class employees, while commitments such as living expenses, school fees and others continue to increase. 

All of these have a significant impact on the credit needs of South Africans and their ability to repay debt. While we understand that not all consumers may retain the ability to repay their debts, many consumers may tend to want more. However, they do not realise they are accumulating more debt. We have made it our mission to assist such people. 

Is your debt becoming too much to handle?

As we have always said, becoming debt-free could be easier than you think. Our affordable repayment plans get you out of debt and save you money. Our honest approach and transparent advice have helped thousands of people make better financial decisions. Contact us for more information on solutions best suitable for you. 

Source (BUSINESSTECH, RESBANK)