Nearly half of people who receive salaries mid-month, the 25th and month end have less than R1,000 or have negative balances by the next payday.
This came out of the data of 402,000 analysed by Standard Bank.
The bank’s head of personal & private banking, Kabelo Makeke, said: “The day before payday, 21% had R1,000 or less, while 28% had negative balances or were using overdrafts. Only half had more than R1,000 in their accounts.
“This situation highlights the growing challenge of balancing income with lifestyle in today’s fast-paced world. However, it also presents an opportunity for individuals to take proactive steps toward financial resilience.”
He says emerging middle-income earners had the highest percentage of customers with less than R1,000 or in the red.
“But private banking customers aren’t exempt either, with one in 10 customers having a negative balance before payday. This trend may also be influenced by the increasing availability of overdraft facilities.
“Many customers hold accounts with multiple banks, which can lead to misinterpretations of their financial health. They may be transferring funds to savings accounts elsewhere closer to payday, demonstrating a potential for better financial management.”
Makeke says customers who spend large portions of their monthly income early in the month are living with no financial cushioning.
This leaves them with little to cover unexpected expenses and Makeke says closing the salary-lifestyle gap is crucial.
“The challenge of balancing income with lifestyle appears to increase as earnings rise, with more individuals falling into the trap of lifestyle inflation.
“Though high-income earners often enjoy greater disposable income, Standard Bank's findings show they are also more susceptible to negative balances, raising awareness about lifestyle inflation, a phenomenon where rising incomes lead to higher spending that often outpaces earnings.
As incomes rise, it’s easy to fall into the trap of spending more, which can create a cycle of debt. However, breaking this cycle is possible
— The bank’s head of personal & private banking, Kabelo Makeke
“As incomes rise, it’s easy to fall into the trap of spending more, which can create a cycle of debt. However, breaking this cycle is possible,” Makeke says.
He advises people to make small, consistent changes, such as tracking expenses and creating a budget aligned with future goals.
“These steps can free up funds for emergency savings or to pay off high-interest debt. Prioritising emergency savings helps reduce reliance on credit, making it easier to manage unexpected expenses.
“This Standard Bank analysis highlights the importance of managing spending habits to achieve month-to-month financial stability and a secure financial future.”
Earlier this month, Sowetan reported that the cost of the average household food basket increased by nearly R30 in September, with some items prioritised and bought first skyrocketing by up to 11%.
A 10kg bag of potatoes and 4kg of bananas recorded the highest increase with prices shooting up by 11%, the Pietermaritzburg Economic Justice & Dignity Group said in its latest Household Affordability Index report.
Potato prices rose from R104,97 in August to R116,97 in September while bananas increased from R58,60 to R65,18 in the same period under review.
A 30kg bag of maize meal, required monthly for a large family, increased by 5% from R304,47 to R318,80 in the same period under review.
“The cost of the average household food basket increased by R28,54 (0,5%) from R5,227.14 in August to R5,255.68 in September. Year-on-year, the cost of the average household food basket increased by R99,91 (1,9%) from R5,155.77 in September 2023 to R5,255.68 in September 2024,” reads part of the report.
“The cost of the foods prioritised and bought first in the household food basket is important. The core foods are bought first and these foods ensure that families do not go hungry while ensuring that meals can be cooked.
“When the prices of core foods increase, there is less money to secure other important mostly nutritionally rich foods, which are essential for health and wellbeing and strong immune systems, namely, meat, eggs and dairy which are critical for protein, iron and calcium; vegetables and fruit which are critical for vitamins, minerals and fibre; and maas, peanut butter and pilchards, good fats, protein and calcium essential for children.”
The data revealed that the core foods contribute 54% of the total cost of the household food basket, at an average cost of R2,860.84 in September.
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