Massive 49-day pay gap problem in South Africa
While the festive season often brings a much-needed break from work, school and studies, it also leaves households stretched thin money-wise, with a massive 49-day gap sitting between the December and January paydays.
Most salaries in South Africa are paid on the 25th of each month. However, December generally proves the exception, with salaries coming in around the middle of the month—for 2024, likely Friday the 13th.
This gives households access to money a lot sooner—making for a happier festive season—but also means the monthly budget has to account for an additional 12 days or so, creating a gap of 42 days.
For those who get paid on the last day of the month, this gap shoots up to 49 days.
According to Shené Mothilal, Solution Owner of Digital Money Manager at Standard Bank, this presents a major worry and stress factor for households over the festive season, as spending often increases in December with festive shopping, holidays and family time – and January piles on the pressure with additional spending on school preparation or delayed travel.
“Standard Bank’s analysis shows that South Africans spend their salaries faster in the last two months of the year,” she said.
“Interestingly, November salaries are spent faster than December’s. December salaries last slightly longer, with customers taking two to three extra days on average to spend 50% of their income compared to November.”
She noted that higher middle-income and high-income earners take nearly twice as long to spend half of their December income—around 11 days compared to just six days for entry-level customers.
“In December, while salaries last longer, the financial strain is tied to early pay dates and the long gap before January’s payday,” she said.
With November salaries spent quickly and December salaries stretched to cover nearly two months, many consumers rely on December pay to manage festive and New Year expenses.
Spending trends vary by customer segment:
- Entry-level market customers prioritise groceries early, likely stocking up for festive consumption
- Emerging high-income earners increase loan payments in November to support holiday spending.
- Young professionals focus on transport, groceries, restaurants, and clothing before Christmas, often shifting debit orders earlier in December.
- Wealthier clients allocate a larger share to holiday travel and related insurance compared to other segments.
Overall, December sees an uptick in spending on self-care, entertainment and shopping, while January sees increased spending on education, travel and post-holiday budgeting, Mothilal said.
South African consumers are being encouraged to be mindful of the coming gap and to budget accordingly to avoid facing financial stress in the new year.
Mothilal said the financial pressure during the festive season highlights the need for effective money management and urged consumers to to make informed decisions and allocate realistic budgets that factor in their likely festive spending.
Take into account not only projected expenses but also recurring spending that might not be in the actual budget, like habitual spending.
“Understanding spending habits is crucial, especially during the festive season when budgeting demands increase,” she said.
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