Money and Markets

It’s not just you. Most people making middling money are broke by the 6th, FNB data shows.

Business Insider SA
(Getty)
(Getty)

  • People who make between R15,000 and a little over R40,000 per month take, on average, five days to blow the bulk of their salaries, FNB says.
  • Those with debt tend to spend most of their income paying for that.
  • That leaves most people in the middle-income group stretching 20% of their salaries over all but the first week of every month.
  • For more stories go to www.BusinessInsider.co.za.

People with middle incomes, of between R180,000 and R500,000 per year, blow the vast majority of their incomes fast, First National Bank (FNB) said on Tuesday.

On average it takes that group just five days to spend 80% of their salaries, FNB said. That leaves a long, long month for most of those who are making between R15,000 and a bit over R40,000 per month; a fifth of their income has to stretch for well over three weeks.

Among those with secure and unsecured debt, a total of 65% of their income goes towards that debt, the bank said.

FNB is promoting the financial-wellness options available via its banking app.

Recent data shows that South African consumers have been turning to credit cards and personal loans to make it through the month, as food and petrol prices soar, while salaries remain flat.

Factoring in inflation, South Africans now earn around a third less than they did in 2016.

As of March, the average South African salary earner took home a little less than R15,000 per month, after a decrease in nominal wages paid according to numbers from payments clearing house BankServAfrica.

Salaries have generally not kept up with inflation during the pandemic years, even before the price shocks that came with Russia's invasion of Ukraine and the impact that had on oil and grain markets.

The Reserve Bank is now widely expected to increase interest rates by 50 basis points this week, the biggest single move seen since 2016, in order to combat inflation that threatens to exceed its maximum target of 6%.

If passed through to consumers exactly, that will add a little over R400 per month in payments for every R1 million in loans or mortgages.

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