Middle income South Africans are in trouble

by | May 19, 2021 | Personal Finance

Results for the period 1 October 2020 to 31 March 2021, has been published by financial services company, Transaction Capital. Their research has confirmed what many have suspected for a while – Covid 19 and a struggling economy has placed huge financial strain on middle class South Africans.

Citing credit statistics, wage data and unemployment figures, the group said that overdue debt balances continue to increase, with a R33 billion increase seen in 2020 alone. That is a big number!

Transaction Capital also stated that 34% of households in South Africa are forecast to fall out of the middle-class and say that this is further emphasised by wage data, which shows fewer South Africans having an income over R22 000/m – while significant more South Africans are seeing incomes of less than R8,000/m

It seems that people living on the bare basics and who were already experiencing hardships before the first lockdown of 2020, have been less affected than middle and upper class.

Sebastien Alexanderson, CEO of National Debt Advisors also heads up Bamboo – a plant powered restaurant.  Sebastien and Bamboo teamed up with NGO Breadline Africa last year during the heart of the pandemic to give healthy meals daily, to those who simply could not afford it.

“We did this as a Bamboo project, because we knew there were so many people who were going hungry – but I saw so much of what we were experiencing at National Debt Advisors, reflected in our feeding schemes. Suddenly, it was not only the poorest of the poor who needed help – but middle and upper income families whose income had been affected, whether completely lost or cut”

If you were earning R6 000 a month and lockdown hit, but you were still earning and living off the same amount – then nothing much changed for you. But if you were earning R40 000 per month and your monthly living expenses and debt repayments were R35 000 per month, but your income was slashed to R25 000 per month – then you were in trouble!

Many people accepted the payment holidays offered by banks, but this relief was just temporary – and the distress continued when things returned to normal.

It is isn’t a matter of income. How much you earn is only important in terms of how much you spend – and if your expenditure is consistently more than your income for months at a time, then you should consider getting professional help.

Registered debt counsellors can help those across all income brackets – but especially those in the middle income group – to more easily afford their monthly living expenses and their debt repayments. National Debt Advisors is the leading debt counselling company in the country. Contact us today if you are struggling with your finances.

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