Earning more is no guarantee against getting into serious financial trouble, with new debt review data showing that one in five applicants earns more than R15 000 a month and one in eight earns more than R20 000.
The South African Financial Pressure Index, compiled by Debt Solutions 4U from debt review applications and credit bureau data, shows median unsecured debt rising sharply through the income bands.
Among applicants earning between R5 000 and R10 000 a month, median unsecured debt was R10 295, compared with R121 134 for those earning between R20 000 and R30 000.
Across the 1 577 applications with complete income and debt information, the median share of net income going towards unsecured debt repayments was 57.8%, before any bond or vehicle finance was taken into account.
The findings come as broader research points to continued pressure on household finances. FinMark Trust’s FinScope Consumer South Africa 2025 Survey found that 48% of adults, equivalent to about 22.4 million people, were not saving at all, while formal saving fell to 22% in 2025 from 30% a year earlier.
At the same time, the South African Reserve Bank has reported that household debt grew faster than nominal disposable income during the first quarter of this year, lifting the household debt-to-income ratio to 62.2% from 61.8%.
Spending versus earning
Ben Webbstock, founder of Fynbos Money says consumers first need to distinguish between consistently spending more than they earn and an unexpected expense temporarily pushing costs above income. “If your regular monthly expenses consistently exceed your income, that is a warning sign that needs to be addressed before you start thinking about saving or investing,” he says.
Webbstock says consumers should examine where their money is going, distinguish between needs and wants and identify expenses that can be reduced or removed. The aim, he says, is to reach a point where ordinary monthly expenses are comfortably covered by income, leaving money over to improve the household’s financial position.
A consumer who ordinarily lives within their means faces a different problem when confronted with an unexpected car repair, medical bill or period without income, Webbstock says. “This is where an emergency fund becomes important.”
Build the buffer first
Leonie van Pletzen, CEO of the Credit Association of South Africa, says living pay cheque to pay cheque exposes consumers to shocks including unexpected repairs, medical co-payments and utility price increases. A dedicated liquid reserve can reduce the need to turn to short-term loans, credit cards or registered micro-lenders when these expenses arise.
Van Pletzen describes debt review under the National Credit Act as a legal safety net once someone becomes over-indebted, but says preventative measures are preferable. She recommends regularly auditing debit orders and discretionary spending to identify expenses contributing to a monthly shortfall.
National Debt Counsellors director René Moonsamy says consumers should, where possible, prioritise paying off high-interest unsecured debt and direct extra money towards settling debt rather than taking on additional credit.
Moonsamy also advises consumers to avoid using credit for everyday expenses, maintain emergency savings for unexpected costs and regularly review outstanding balances and repayments.
“The goal should be to steadily reduce your overall debt while building enough financial resilience to avoid relying on credit when something unexpected happens,” Moonsamy says.
Trans-50 notes that the expenses consumers need to prepare for can change with age, with healthcare costs, home repairs and car breakdowns catching older consumers off guard.
The cost of borrowing instead
Satrix quantitative portfolio manager Siyabulela Nomoyi says helping parents, siblings or extended family should be included in financial planning rather than treated as an afterthought.
Sino Booi, product development lead at Momentum Savings, illustrates the cost of borrowing rather than saving with the example of a R100 000 holiday five years from now.
Under Booi’s calculations, saving costs nearly R40 000 less than borrowing over the same period. Avoiding credit for discretionary purchases also keeps borrowing available for something urgent and unavoidable. “That is why we call emergency savings a lifesaver,” he says.
Webbstock says consumers starting to build an emergency buffer should consider where they put the money. While a tax-free savings account can be an effective long-term investment, withdrawing money does not restore tax-free contribution room already used, meaning an accessible discretionary savings vehicle may initially be more appropriate.
A tax-free savings account can then form part of longer-term investment planning once the financial foundations are in place, says Webbstock.
Webbstock says consumers who have brought their expenses under control should also consider ways to increase their earning potential. “It can ultimately be easier to increase your income by R1 000 than to find another R1 000 to cut from an already stretched household budget,” he says.
Therèse Havenga, head of business transformation at Momentum Savings, says many consumers postpone saving until they receive an increase or debt has been paid off, but waiting for an easier time can result in saving continually being postponed.
Rather than waiting, Havenga recommends choosing a feasible amount, automating it and increasing contributions when income allows. “The increase is swallowed by new expenses, the calmer month never arrives, and one demanding season of life simply gives way to the next,” she says.
THE NATIONAL