Money and Markets

South Africans admit their money mistakes: Store accounts, 'random coffees' and balloon loans

Business Insider SA
If only the king's men had had some bandages.
  • South Africans are confessing their big money mistakes after a call from analyst Bright Khumalo.
  • Common themes include buying fancy cars, and cashing in retirement savings early.
  • Going into debt to supposedly build up a good credit record must be one of the dumbest things people do, Khumalo believes.
  • For more stories go to

Ask South Africans what their greatest financials mistakes were, and common themes emerge: buying a car they can’t afford, cashing in their pensions mid-career and overspending.

Recently, Bright Khumalo, an analyst and portfolio manager with Vestact Asset Management in Johannesburg, asked his more than 12,000 followers what their biggest money mistakes were.

READ | A young Joburg analyst saved almost R7,000 in 2019 – by putting aside 10c in January and following this simply strategy.

The responses poured in:

In Khumalo’s own view, the dumbest mistake of all is to get into debt because of the belief that it will help you build up a good credit record – for if you want to one day buy a property, for example. 

“Do people not know that your student loan counts as a loan towards your credit score? This one is up there with buying a German machine on credit to please colleagues and friends.”

Many people fail to delay gratification and use credit for basic consumables that should be bought in cash, he adds.

Another mistake he has seen is people who “jump into the stock market head first” – without building an emergency account equal to at least a year’s worth of your monthly expenses. When markets start to tank, and you quickly need cash to deal with an emergency, you may have to sell at a loss.

Emergency accounts should be kept in risk-free assets like 32-day notice accounts, he believes. “No need to get creative here,” says Khumalo.

Even when they don’t need the money urgently, often people sell shares at the bottom of the market, losing confidence that their investments will ever recover.

The solution is to only view your share statement once a year, and not to stop investing monthly amounts even amid market mayhem, he advises.

Other big mistakes are taking on debt for someone else in your own name or standing surety for someone else - “the long-term consequences are dire” - or falling victim of some scam like a Ponzi scheme.

You can avoid some of the biggest problems by living by the adage: Spend less than you earn and save/invest the difference, says Khumalo.

Receive a daily update on your cellphone with all our latest news: click here.

Get the best of our site emailed to you daily: click here.

Also from Business Insider South Africa: