Almost half of salaried workers have a balance of less than 1,000 rans or a negative balance by payday.
Source: Provided. Kabelo Makeke, Head of Personal and Private Banking at Standard Bank South Africa, said:
Standard Bank analyzed data from more than 402,000 people who receive their paychecks on common pay dates such as the middle of the month, the 25th and the end of the month.
21% had a balance of less than R1,000 on the day before payday, and 28% had a negative balance or had an overdraft. Only half had more than R1,000 in their accounts.
Kabelo Makeke, head of personal and private banking at Standard Bank South Africa, points out that while this insight may be discouraging, there are effective strategies that can help you better manage your finances.
Financial management in transition
“This situation highlights the growing challenge of balancing income and lifestyle in today’s fast-paced world. It is also an opportunity to take action,” says Makeke.
Across the different income groups, emerging middle income groups had the highest proportion of customers with account balances of less than R1,000 or in the red. But even private banking customers are not exempt from financial strain, with one in 10 reporting a negative balance before payday.
“Many customers have accounts with multiple banks, which can lead to misunderstandings about their financial situation. They may move funds to other savings accounts as payday approaches, and It shows the potential for better management.”
However, Makeke stresses that many of his clients spend most of their monthly income at the beginning of the month, leaving them with little financial cushion to cover unexpected expenses. Therefore, it is important to bridge the gap between salary and lifestyle.
“As incomes increase, the challenge of balancing income and lifestyle seems to increase, and more people are falling into the lifestyle inflation trap,” Makeke says.
Bridging the gap between salary and lifestyle
High-income earners often enjoy more disposable income, but research from Standard Bank also shows that high-income earners are more likely to have negative balances, raising awareness of lifestyle inflation. . Lifestyle inflation is a phenomenon in which rising income causes spending to rise, often exceeding income.
“It’s easy to fall into the trap of more income leading to more expenses, which can create a cycle of debt. However, it is possible to break this cycle,” Makeke explains.
Makeke advocates small, consistent changes like tracking your expenses and creating a budget that aligns with your future goals.
“These steps will free up funds that can be used for emergency savings or paying off high-interest debt. Prioritizing emergency savings reduces your reliance on credit and makes it easier to manage unexpected expenses. ” he added.
This Standard Bank analysis highlights the importance of managing your spending habits to achieve monthly financial stability and a secure financial future.
