Household indebtedness in South Africa is currently at crisis levels. At least three-quarters of South African households admit to being under significant financial pressure. Only 23% of South Africans have any money left at the end of the month – with the other 77% left flat broke at the end of the month, with no hope of saving any money. Many households are under financial pressure as a result of the bad management of their finances. That includes things like poor financial planning, the incorrect use of credit, high levels of indebtedness and low levels of financial literacy.
New data shows that the age group with the largest amount of debt in South Africa is between 31 and 45 who collectively owe 53% of all outstanding debt.
More than half of all consumers owe 75% or more of their income to creditors.
Data from the South African Human Rights Commission (SAHRC) showed that, of 19 million credit active consumers in South Africa, over half had impaired credit records, meaning they were three months or more in arrears. More than 11 million of South Africa’s credit active consumers were described as over-indebted by the SAHRC.
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Money struggles can have a negative effect on more than just a person’s job performance level. Someone who is concerned over their financial situation is more likely to take out a loan or even a hardship withdrawal against their retirement savings. This seriously hurts their ability to save long term and adds to the stress they feel, which can further diminish their production at work.