One week until broke in South Africa
South African workers are seeing a turnaround in their mental and financial health, but a significant number are still ill-prepared for sudden shocks or loss of income.
This is according to the 2024 Nedbank NedFinHealth Monitor Report, which examines the financial health of working South Africans based on the spending, saving, borrowing and planning habits.
The group found that between the 2023 and 2024 reports, households in South Africa were hit by persistent financial pressure—amidst wages lagging behind inflation and rising living costs, many households faced growing difficulties in managing their household finances.
However, there was a marked turn in sentiment during the year, the group noted, likely driven by the formation of the Government of National Unity after the 2024 elections which boosted sentiment.
This has made working South Africans more confident about the actions they are taking to meet long term goals and help them meet monthly expenses without borrowing or withdrawing from their savings.
Despite the turn in sentiment, however, there are still significant portions of the working population who are struggling.
The report found that 22% of workers (of 1,500 surveyed) expressed that they are ‘not at all confident’ in meeting long-term financial goals. This is down six percentage points from 2023, but still representing one in five workers.
Worryingly, 10% of workers have less than one week of living expenses saved, meaning they are unable to meet their immediate needs in the event of a loss of income, with virtually no wiggle room if an unexpected cost arises.
Around the same percentage (11%) have 1-3 weeks of living expenses saved up. Taken together, around one in five South African workers would not be able to survive a full month on their savings.
Looking more broadly, around 52% of respondents said that they had enough savings to cover at least three months of living expenses – this was up from 49% in 2023.
However, the remaining 48% would struggle to get by without turning to borrowing and debt.
Emergency savings
According to Nedbank, the survey results are still leaning more positively, with respondents still putting away emergency savings despite struggling to pay their bills on time.
“The improvement in the perceptions of sufficient emergency savings among workers despite the difficulties in paying bills may reflect a shift toward more cautious and forward-looking financial behaviour that prioritises building emergency savings to protect themselves against unexpected financial shocks,” Nedbank said.
An alternative explanation could be that workers are prioritising emergency savings over bill payments. However, the data does not support this explanation since workers who can pay their bills on time are much more likely to have emergency savings.
For example, 81% of those who pay all their bills on time or nearly all (80–90%) of their bills on time (68%) have emergency savings.
Surprisingly, even among those who struggle the most with paying their bills, 47% of workers who pay some of their bills on time (40–60%) still have emergency savings and 18% of workers who pay very few of their bills on time (0–40%) also have emergency savings.
“This indicates that the ability to pay bills on time and having emergency savings go hand in hand. We can conclude that the increase in workers reporting that they have emergency savings is not at the expense of paying bills on time.”
Nedbank noted that, despite the increase in the number of workers reporting sufficient emergency savings, many workers are still concentrated in the lower savings categories (eg less than R2,000, R2,000–R5,000 and R5,000–R10,000) that did not show statistically significant changes in their proportions.
“This suggests that while more workers are starting to save for emergencies, the amounts they are saving might still be modest and possibly inadequate for covering major financial shocks and for improving overall financial health,” it said.
The only significant change was observed in the proportion of workers with more than R50,000 in emergency savings (from 5.7% to 7.9%), most likely higher income earners who are already in a more stable financial situation increasing their savings significantly.
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