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.
“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.
CEO of FNB Consumer, Christoph Nieuwoudt said that more than half of consumers miss at least one debit order over a 12-month period, indicating the pressure consumers are under.
“For almost 40% of such customers, debt repayments make up more than half of their take-home pay, which we consider to be very high. The main driver of this is large numbers of microlender loans and store cards that consumers take up. The ideal scenario for a consumer is to have one provider who gives them a transactional account and the right type of credit when needed,” he said.
FNB provided some tips for better money management:
- Maximise free programmes such as eBucks Rewards, which rewards you for swiping your FNB Credit or Cheque card when making purchases and can save you up to 40%.
- Use the right credit and avoid expensive credit with no long-term value. Relatively cheaper credit such as an overdraft or a credit card is useful for short-term purchases while a personal loan may be adequate for home renovations which can generate future value.
- Synchronise your savings to your salary date and schedule an automatic transfer to a cash investment account on the day or day after your salary gets paid into your transactional account.
- FNB customers can activate a ‘Bank Your Change’ capability on their cheque account. The Bank will round-up the amounts charged for successful point of sale card transactions to the nearest rand and the funds will be transferred weekly to a savings account.