Half of middle-income South Africans spend their monthly salary within 5 days

New data from FNB shows that middle-income South Africans rely heavily on debt with some using as much as a quarter of their monthly income to pay interest on debt.

However, the bank said that consumers are showing strong appetite to save after its customers initiated nearly 20,000 savings goals in just a few days since the launch of the Savings Goals feature on the bank’s App.

To date, these goals include saving for a car, travel, home improvements, emergencies and education.

“The need to save cannot be ignored,” said Himal Parbhoo, CEO of FNB Retail Cash Investments. “We are offering customers help to minimise reliance on debt by saving more. More importantly, we are walking the savings journey with customers by enabling them to use the right savings product to reach their goal.

“Customers have the option of selecting up to 10 main Savings Goals categories, including: education, emergencies, travel, saving to start a business and health and wellness; with over 50 different sub categories.”

Doret Jooste, CEO of FNB’s Money Management unit 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.  If you’re not intentionally saving for something special, chances are that money will be spent.

“These customers are also heavily reliant on debt with some using as much as 25% of their income monthly income to pay interest on debt. This further limits families’ capacity to save.”

FNB  categorises middle-income consumers as those who earn a gross monthly income of between R7,000 up to R60,000.

A number of financial institutions have this week published data relating to consumer saving and spending habits as part of ‘Savings Month’.

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.

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.

“We all want to improve our lives – and it’s positive to see that we’re making a plan to put a little bit away each month to realise our dreams. Even saving 5% of our income is a step in the right direction, and when we choose a bank that backs us with high interest rates, we can reach our goals that much faster,” said Keraan.

What are some of the goals that you have or are working towards?

Three quarters of respondents (67%) use a traditional savings account to save for their goals. For the rest of us who save, 19% use a stokvel, 10% buy unit trusts, shares or investment portfolios and 3% choose to draw cash out every month and keep it separately.

Read: Most South Africans run out of money by the middle of the month