The plight of the average middle class South African


The average middle class South African has run out of runway – having already depleted savings – and is now tapping into whatever credit facilities they may have.

These are the figures revealed in the 2019 Old Mutual Savings & Investment Monitor which is conducted each year and examines the financial attitude of urban, working South Africans.

The monitor has built up 10 years of data and watching the trends and changes in behaviour provides insight into the financial attitudes and situations of ordinary people.

What is particularly concerning this year is the significant decrease in savings and increase in personal loans for households earning between R14 000 and R39 999.

This is no doubt a reflection of the increasing number of retrenchments this year. As the report highlights: “South Africa’s unemployment rate increased to 27.6% in the first quarter of 2019 and news of large-scale retrenchments abound, with more to come.

“In March 2019, Standard Bank announced dozens of branch closures, affecting 1 200 jobs. Group Five filed for bankruptcy protection and announced further retrenchments (on the back of losing 1 000 jobs in 2018).

“In May 2019, Tongaat Hulett issued S189 letters [section 189 of the Labour Relations Act deals with retrenchment] to 5 000 employees. June 2019 saw Sibanye-Stillwater announce 3 000 retrenchments and MultiChoice announced that it would retrench 2 000 employees at its call centres and walk-in service centres.”

It is unsurprising then that this year’s survey found that breadwinners are increasingly looked to by unemployed relatives for financial assistance.

This has resulted in an increase in the number of people supporting adult dependants, with the knock-on increase for those who find themselves part of the sandwich generation – now at the highest level since the inception of this study in 2009.

The term ‘sandwich generation’ has been coined to describe those who are supporting not only children but also parents and/or other older dependants.

This has increased significantly and now over a third of households describe themselves as part of the sandwich generation, which represents a 26% increase from last year.

This is the highest level recorded since the inception of the Old Mutual Savings & Investment Monitor. The increase in dependants is driven by an increase in dependant parents, with over one in four people now supporting their parents.

While supporting family members has a higher incidence among black households, even white respondents have seen the number of households supporting adult family more than doubling from 8% to 17%, while 60% of those surveyed said they were either planning on supporting, or expecting to support, their parents one day.


When it came to the question of whether your household income took care of all your expenses, with a bit of money to spare at month end, for households earning between R14 000 and R19 999, only 26% were managing to come out each month, with the percentage climbing to 38% for individuals earning up to R40 000.

Even for the higher-income households earning more than R40 000, fewer than half said they were regularly managing to meet all their expenses.

This is concerning from the perspective of affordability but could also indicate a lack of budgeting and planning.


For emergencies, households have very little in terms of a buffer to manage an unforeseen expense. For households earning between R14 000 and R19 999, 43% said they would not manage an expense of R10 000.

Only 4% of them would be able to tap into savings for the R10 000 and the rest would use credit lines or borrow from family – which effectively means they are one pay cheque away from financial disaster.

A similar trend was seen for households earning up to R40 000 a month, with only 2% saying they have savings to cover a R50 000 unforeseen expense, and nearly two-thirds saying they have neither savings or credit lines to manage with that kind of unexpected expense.

Since 2016, respondents have been asked directly whether they save for financial emergencies and, if they do, where these funds are saved.

Only half of the respondents are saving for emergencies and this is a sharp decline from previous years.

This suggests that savings levels are being depleted and emergency savings are now a luxury for some.


This possibly explains the increase in personal loans in this year’s survey, especially for middle class households earning between R14 000 and R39 999.

In the R14 000 to R19 999 income range, the use of personal loans has doubled from last year.

What is interesting to note is that the incidence of car finance is decreasing, which suggests that, for many households, borrowing is now more about survival than asset acquisition.

This is also supported by the way people are using their credit cards.

Only 16% of people pay their credit cards off in full at the end of the month, while two out of three people pay the minimum only.

The survey found that credit is being used to finance everyday purchases, not just emergencies and large ticket items.

Only 18% of those who use their credit cards mainly for everyday purchases, like groceries, pay their cards off in full at the end of the month and nearly half of them pay the minimum.

By only paying off the minimum instalment on a credit card, those consumers could be financing their groceries over decades without realising it.

While the weak economy is having a major impact on our pockets, we still have choices around financing and managing our money.

Now, more than ever, individuals need to start budgeting, planning and finding ways to earn a bit of extra income.

If we continue to kick our problems down the road with more credit, we will very soon reach a point where we are trapped in a black hole of indebtedness from which it becomes impossible to escape.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24


Read the digital editions of City Press here.
Read now
Voting Booth
Tourism Minister Mmamoloko Kubayi-Ngubane will act as health minister after President Cyril Ramaphosa placed Health Minister Dr Zweli Mkhize on special leave while the SIU completes the probe into the irregular Digital Vibes contract. What are your thoughts on this?
Please select an option Oops! Something went wrong, please try again later.
Special leave is a whitewash.
39% - 89 votes
SA’s tourism sector needs undivided attention.
4% - 9 votes
Let's wait and see
10% - 22 votes
What is the point of deputy ministers?
47% - 107 votes