More than half ‘spend salary in just five days’

As the festive season has kicked off in earnest and consumers spend more, FNB yesterday warned about 56% of middle income consumers spend all their monthly income within five days or less after receiving it.

This is according to data from FNB’s retail segment, which categorises middle income consumers as those who earn a gross monthly income of between R7 000 and R60 000.

Raj Makanjee, chief executive of FNB Retail, said for many consumers, it was not only a matter of living from one salary to another, the reality was their monthly salary just did not last 30 days.

Makanjee encouraged consumers to exercise financial discipline, saying it was not dependent on having greater income, but required deliberate steps.

“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 for unforeseen expenses. High spending and limited savings cause consumers to rely on credit to get through the month, making them vulnerable to be caught in a debt trap,” Makanjee said.

Christoph Nieuwoudt, chief executive of FNB Consumer, said more than half of consumers miss at least one debit order over a 12-month period, indicating the pressure consumers are under. “For almost 40%, debt repayments make up more than half of their take-home pay. The main driver is large numbers of microlender loans and store cards. The ideal scenario for a consumer is to have one provider for a transactional account and the right type of credit,” Nieuwoudt said.

The bank said it had also seen that 30% of middle income consumers who are saving, save for emergencies and at least one other longer-term goal.