According to new information from FNB’s Retail segment, 56% of South Africa’s middle income consumers spend all of their monthly earnings in five days or less. Middle income consumers are categorised as individuals who earn a gross monthly income of between R7,000 up to R60,000.
Chief executive of FNB Retail, Raj Makanjee says that most consumers tend to struggle with money management, with the shortfall leading to sacrifices in important areas such as having back up or emergency savings. 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.
Data shows that approximately 40% of consumers spend more than 50% of their salary on debt repayments. Christoph Nieuwoudt, CEO of FNB Consumer, said that microlender loans and store cards are the main reason for this demise. More than half of consumers miss at least one debit order over a 12-month period, indicating the pressure consumers are under.
The bank said it had also seen that 30 percent of middle income consumers who are saving, save for emergencies and at least one other longer-term goal.
How big is South Africa’s middle class? (Business Tech)
South Africa’s middle class varies quite widely depending on how one chooses to define and calculate it.
|Method||Middle class as % of SA population||Black South Africans as % of middle class|
|Universal range||28.5% – 43.2%||–|