With the festive season kicking off, it is norm that consumers spend more, but FNB has warned that approximately 56 percent of middle income consumers in South Africa spend all their monthly income in five days or less after receiving it.
The surprising data was released by FNB’s Retail segment, it categorises middle income consumers as those who earn a gross monthly income of between R7,000 up to R60,000.
Chief executive of FNB Retail, Raj Makanjee said many consumers monthly salary does not last them a month.
Makanjee said consumers must find ways to be financial stable and not dependent on having greater income but to be financial steps requires people to make decisions about their money.
“These consumers tend to struggle with money management, with the shortfall leading to sacrifices in important areas such as having back-up or emergency saving that can be used to pay for unforeseen expenses. 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,” Makanjee said.
Christoph Nieuwoudt, chief executive of FNB Consumer, said over half of consumers miss at least one debit order over a 12-month period, meaning consumers are under increasing pressure.
“For almost 40 percent of such customers, debt repayments make up more than half of their take-home-pay, which we consider to be very high. The main driver of this is large numbers of microlender loans and store cards that consumers take up. The ideal scenario for a consumer is to have one provider who gives them a transactional account and the right type of credit when needed,” Nieuwoudt said.