Rising costs leave households with no money to save

By Palesa Matlala

• Nearly four in 10 South Africans expect to miss a loan or bill payment, while almost eight in 10 say rising prices are putting their household finances under pressure.

• Debt experts say many families are not failing to save because they are careless, but because most of their income goes towards food, transport, rent and debt repayments.

As payday gets closer, millions of South Africans are counting every rand.

For many families, their salaries or wages are already finished before the end of the month.

Saving money has become a luxury that many simply cannot afford.

The National Debt Counselling Association says the problem is no longer poor budgeting.

Instead, many households are trapped by rising living costs, debt repayments and everyday expenses that leave them with little or no money left over.

The warning comes during National Savings Month, which encourages people to put money aside for emergencies and their future.

But debt experts say that advice is difficult to follow when there is nothing left to save.

According to TransUnion’s latest Consumer Pulse Study, 39% of South Africans expect to miss at least one bill or loan repayment.

Only 37% believe their income is keeping up with rising prices.

The survey also found that 79% of consumers say inflation and the rising cost of living are among their biggest financial worries.

National Debt Counselling Association chairperson René Moonsamy said South Africans generally fall into three groups.

The first group can afford to save but chooses not to.

The second group has some money available but spends it on other priorities.

The third group has no choice because almost every rand they earn goes towards essential living costs and debt.

Moonsamy said this last group faces the biggest challenge.

“They cannot save because they simply do not have enough money left after paying for the basics,” she said.

She explained that many families spend most of their income on rent or home loans, transport, electricity, water, school fees, insurance, food and debt repayments.

When unexpected expenses happen, such as a car breaking down, a medical emergency or a leaking roof, many people have no savings to fall back on.

Instead, they borrow more money.

That creates an even bigger problem because the new debt means higher monthly repayments, leaving even less money available the following month.

“It becomes a cycle that is very difficult to escape,” Moonsamy said.

She encouraged consumers to regularly check their bank statements and cancel subscriptions or monthly deductions they no longer need.

Even small savings can help reduce the need to borrow money in the future.

However, she said some families have already cut back as much as possible.

For those households, the answer may not be spending less, but getting help to manage their debt.

Moonsamy said debt counselling can help consumers negotiate affordable repayment plans with creditors and prevent their financial situation from getting worse.

She said many people avoid debt counselling because they think it means they have failed financially.

“In fact, asking for help early is one of the smartest financial decisions you can make,” she said.

“It can protect your home, your car and your income while helping you get back on your feet.”

South Africa continues to battle high unemployment, rising living costs and slow economic growth.

For millions of households, simply making it to the next payday has become a monthly struggle.

Experts say building financial security starts with getting debt under control before trying to build savings.

Pictured above: Debt experts say millions of South Africans are struggling to save because rising living costs and loan repayments leave them with little money before payday.

Image source: File