10/05/2017 12:40 SAST | Updated 10/05/2017 13:18 SAST

Even Conservative Middle-Class Spenders Are Feeling The Pinch As The Economy Stagnates

More than 70% of professional, middle-class South Africans are under financial stress.

Anke van Wyk via Getty Images

The 2017 Sanlam Benchmark Survey surveyed more than 1,300 employees, three-quarters of whom said they were under severe financial stress and almost a quarter saying they are stressed about the issue all the time.

The survey pinpointed short-term debt as the top source of financial stress, followed by the inability to save for the future or for immediate emergencies, extended family obligations or school and university fees.

While poor financial literacy and a culture of consumerism, particularly among black people, are often blamed for the financial woes of the middle class, head of financial education at Old Mutual John Manyike says even the most financially literate and the more careful of spenders are feeling the pinch because of the stagnant economy.

"The predicament is made worse by fuel price increases, affecting the cost of getting basic necessities, particularly food."

This means consumers have less free cash to spend on other things. This is worse for South Africans with too much short debt, as they increasingly feel the pressure on their already stretched budgets.

Manyike is of the opinion that the middle class is fighting a hard battle in this economy, with salaries that do not necessarily increase in line with inflation and so make little difference, if any, to their financial position.

How then, can the middle class keep their heads above the water during this time?

"If people draw up a budget, they must stick to it," says Manyike. This helps curb unnecessary spending. So, even though there are aspects of personal finance that are beyond our control, there are still areas that can be improved dramatically.

Head of FNB consumer education Eunice Sibiya agrees, suggesting two practical ways to manage personal finances better:

  1. Self-imposed house arrest: The biggest temptation to spend money is when you're out and about. And although this may seem dramatic, don't take any cash or cards with you, if that's what it takes.
  2. Cut down on everyday expenses: While there are easy wins such as packed lunches or foregoing a cappuccino every day at work; car-pooling, downgrading your satellite TV subscription and selling unwanted stuff for quick cash are a few ways to make your money go further.

Lastly, Manyike suggests a rethink of what success is and what it means.

"Materialism, consumerism and instant gratification, over-reliance on credit are real issues affecting our people."