Money’s too tight to mention

SALARIES no longer stretch over a month, with 56% of middle-income earners spending their money within five days of getting paid.

Research conducted by First National Bank’s retail segment found that South Africans are living from salary to salary.

“The reality is their monthly salary just doesn’t last for 30 days,” said the chief executive of FNB retail, Raj Makanjee.

Those who earn a gross monthly income of between R7000 and R60000 are considered middle-income earners.

“These consumers tend to struggle with money management, with the shortfall leading to sacrifices in important areas such as having back-up or emergency savings that can be used to pay for unforeseen expenses.”

Makanjee said high spending and limited savings resulted in South Africans relying on credit to get through the month. This made them more vulnerable to being caught in a debt trap, he said.

Makanjee encouraged middle-income earners to exercise financial discipline by banking efficiently and managing their savings, rather than being dependent on credit cards and other sources of securing funds.

Bradley Govender, 39, of Phoenix, the sole breadwinner in his home, knows all about falling into a debt trap.

Five years ago, he racked up debt totalling R400 000 – just to keep his household afloat – every month.

This resulted in Govender, who is employed in the electronics field and earns R10 000 a month, being blacklisted.

“I am now under debt review and every month I have to spend R5000 to ensure those accounts are paid. A few days after being paid, I am already waiting for my next salary, because after the rent, the utility bills, groceries, petrol and the DStv are paid for, I am left with next to nothing.”

He said living with debt was a burden.

Economist Azar Jammine said many resorted to debt to pay off old debt.

“People overspend, not realising it is not conducive to their sustainable wellbeing. The only way to make money stretch is to spend less and budget. However, people do not understand how to budget.”

He said those earning R60 000 were also struggling to make their buck last, as they overextend their spend.

“They are the ones with the fancy car and fancy house, going on trips around the world with their families and basically blowing their money. The only ones I can say are comfortable, are the ones in higher positions in companies.”

The head of marketing at Momentum Financial Planning, Andile Jonas, said there were few middle-income earners who could make their salaries last a month.

“It’s not about how much you earn, but how you spend it,” he said.

Jonas said there were two types of debut – good and bad.

“Good debt is debt you put yourself in because you are buying a car or a house or something that grows you.”

Bad debt was when people used their credit cards to buy groceries and for entertainment, and which unknowingly got one into deeper trouble.

It was therefore vital, he said, to budget.

“You need to understand what you are spending on, and then it will be easy to manage your money. Aside from creating a budget, you need to religiously stick to it.”