15 Days After Pay, Most South Africans Go Broke- Report Reveals
A new report has revealed that most South Africans run out of money two weeks after payment. The survey dubbed “More Month Than Money” commissioned by Tymebank reveals that 76 per cent of South Africans go broke before the end of the month.
“After paying these big-ticket items, 57 per cent of us don’t make it much further into the month; by the 15th we’ve run out of money and are back to borrowing. This makes us feel frustrated (51 per cent) and helpless (35 per cent),” the report said.
43 Per cent of people borrow money to get through the rest of the month after going broke. Only 9 per cent of those surveyed turn to banks to borrow loans to get them through the month, 20 per cent use credit cards and the majority, 59 per cent, resort to borrowing money from family and friends.
“Within African cultures this is particularly true because of black tax, where those who earn a salary are expected to share it with family members in need, until they themselves have nothing left to save or invest,” acting CEO of SA Savings Institute and director of The Financial Planning Institute of Southern Africa, Gerald Mwandiambira said.
The survey highlighted that people spend their money on Housing (41 per cent), groceries (24 per cent), transport costs (10 per cent), and school fees (8 per cent). The report reveals that the last things people spend on are clothing and security.
“The survey shows that our priorities are in the right place, as we’re spending on the Big Three first – housing, groceries and transport,” said Keraan. “However, it also shows that while debt is not the first expense to be paid, it constitutes a major portion of our monthly expenditure.”
40 per cent of people are spending between 41 – 100 per cent of monthly income on servicing debt including loans, credit cards, store cards and bond payments.
24 per cent are self-disciplined and do not purchase luxuries with money borrowed while the rest buy non-essentials even when they are broke: 17 per cent buy takeaways, 16 per cent go clothes shopping, 12 per cent socialise, 12 per cent eat out, 11 per cent buy alcohol, and 5 per cent get their hair and nails done.
The study says women are hit the most as 59 per cent of them run out of money before the end of the month, compared to 56 per cent of men.
Mwandiambira said over 60 per cent of households in South Africa are fatherless, which means more financial responsibilities are placed on mothers. Women were found to be the best budgeters.
“It can be very overwhelming to cut back on everything at once. So start small, even if that means putting away an extra 5 per cent here or there. These small changes can make a big difference. Getting started is the hardest part,” Author Sam Beckbessinger said further urging South Africans to develop a culture of saving.
Featured Image Courtesy: Invested Wallet