In a stark revelation regarding the financial wellness of South African workers, an analysis by Standard Bank indicates that nearly half of salary earners are left with less than R1,000 in their accounts or face negative balances come payday.
This study scrutinised the financial status of over 402,000 individuals who receive their salaries on popular payment dates, including mid-month, the 25th, and month-end.
On the eve of payday, the findings found that 21% of these earners had R1,000 or less available, while 28% reported having negative balances or resorted to overdrafts. Alarmingly, only half of the participants were able to keep more than R1,000 in their accounts, sparking concerns about the increasing financial strain faced by many households.
Standard Bank's head of personal and private banking Kabelo Makeke says while this insight might be discouraging, there are effective strategies to help manage finances better.
“This situation highlights the growing challenge of balancing income with lifestyle in today’s fast-paced world. However, it also allows individuals to take proactive steps toward financial resilience,” says Makeke.
The analysis reveals that emerging middle-income earners were the most affected demographic, facing the highest percentages of individuals with less than R1,000 or falling into the red. However, the issue extends to private banking customers as well, with one in ten reporting negative balances before payday.
Makeke says that this trend may be at least partially linked to the ready availability of overdraft facilities, which can create a false sense of financial security. “Many customers hold accounts with multiple banks, which can lead to misinterpretations of their financial health. They may be transferring funds to savings accounts elsewhere closer to payday, demonstrating a potential for better financial management.”
The analysis draws attention to a growing concern: even high earners, who typically enjoy greater disposable income, are not immune. The data shows that they are often equally susceptible to negative balances, a situation exacerbated by lifestyle inflation—the tendency for individuals to increase spending in line with rising earnings.
“As incomes rise, it’s easy to fall into the trap of spending more, which can create a cycle of debt. However, breaking this cycle is possible,” Makeke says. He recommends making small, consistent changes to financial habits, such as tracking expenses and crafting a budget aligned with future goals.
PERSONAL FINANCE