South Africa’s middle class is drowning in debt – and stresses are mounting

 ·21 Jul 2023

South Africa’s middle class is dealing with serious financial difficulties, with over 60% having unsustainable debt levels.

According to DebtBusters’ second annual Money Stress Tracker, three out of four South Africans feel money stress, which has a serious effect on home and work life and on health.

The tracker looks at how financial stress affects other aspects of South African’s lives, with over 35,000 respondents to the 2023 survey, which is used as a representative sample of South African consumers who are not in debt counselling.

78% (2022:70%) said that they feel money stress, with 94% saying that it affects their home life, 78% their work life and 77% saying it impacts their health.

The study said that women and lower-income earners were the most stressed, while those who earn more have high levels of unsustainable debt.

Moreover, younger consumers and those in lower-income bands were more likely to look for a better-paying job, whilst younger consumers are 1.5 times more likely to set a budget and stick to it.

Short-term concerns were the main reason for stress, with half of respondents saying that running out of money before the month-end was their biggest concern, despite it decreasing from 52% in 2022 to 50% in 2023:

Main Financial Concern20222023
Running out of money before the month end52%50%
Struggle to pay off monthly debt36%44%
Interest rate increases0%23%
Unexpected expenses 24%22%
Inflation and living costs27%21%
Load shedding impact 0%17%
School fees15%16%
Retirement 12%13%
Source: DebtBusters’ Money Stress Tracker

Crisis for the middle class

Since 2022, there has been a jump in the number of people anxious about making their monthly debt repayments, increasing from 36% in 2022 to 44% in 2023.

Overall, 70% of respondents said that they spend more than 30% of their after-tax income on debt repayment.

The tracker also found that those taking home more than R20,000 per month had the most debt repayment pressure, with 62% of respondents having unsustainable debt levels.

The study said that this income band is the backbone of South Africa’s middle-class population.

“We advise consumers not to use more than 30% of their take-home pay on debt repayments. 62% of respondents in the two highest income bands we surveyed are spending between 40% or more of their income to service debt. This is simply too much, especially in a high-interest, high-inflation environment,” said Benay Sager, head of DebtBusters.

Interestingly, interest rate and load shedding fears both jumped from 0% in 2022 to 23% and 17% in 2023, respectively.

Although all age groups said that the biggest money stress factor was running out of money before the end of the month, those who were 55 or older were also worried about not having enough to retire.

Those between 25 and 44 were more worried about paying debt.

People between the ages of 25 and 44 were more worried about paying off debt, with 44% saying it is their main financial concern.

Main Financial Concern24=>25-3435-4445-5455=<
School Fees8%15%21%15%6%
Load shedding impact13%16%17%20%21%
Inflation and living costs 25%23%20%19%18%
Unexpected expenses 25%21%21%24%23%
Interest rate increase22%23%23%22%19%
Struggle to pay off monthly debt43%46%45%40%32%
Running out of money before the month’s end55%52%49%45%37%

Regarding the income group, those earning R5,000 or less a month were most stressed about paying debts and school fees.

Those in the R20,000 to R35,000 – the backbone of the middle class – were most concerned about unexpected expenses, inflation and living costs and the impact of load shedding

Those in the highest-earning bracket – R35,000 or more – said that they were most concerned about interest rate hikes.

“This indicates that the highest earners feel the impact of rising interest rates on their financial situation,” Sager said.

Main Financial ConcernR5k>R5k-R10kR10k-R20kR20k-R35kR35k<
School Fees22%15%13%11%9%
Load shedding impact18%17%16%18%17%
Inflation and living costs 22%21%21%23%22%
Unexpected expenses 17%22%25%26%25%
Interest rate increase20%21%23%28%29%
Struggle to pay off monthly debt54%48%40%33%24%
Running out of money before the month’s end53%54%49%43%32%

Read: Massive shift in shopping habits in South Africa as consumers adapt to load shedding

Show comments
Subscribe to our daily newsletter