How South Africans compare financially – by age and income
A growing number of South Africans face financial uncertainty as they transition from financial security to being unable to see the month.
Data from the latest Momentum / Unisa index show an abandonment of households that describe themselves as “financially well”. For the purposes of the report, households were divided into four clear groups based on their state of financial well-being.
The four groups are:
- In financial difficulty (0 – 29) – Most of these households live in extreme poverty and misery. They need significant outside help, which may include government social security transfers, remittances, debt consolidation loans, debt counseling, and more. to improve the financial situation. These households are likely to miss payments and use high-cost credit, including informal unsecured microloans.
- Financially unstable (30 – 59) – This type of household is very sensitive to adverse events (such as the loss of a weekly salary), and bad decisions can change their status in financial distress. Stable or higher income, good financial decisions, discipline and planning can present opportunities for financial exposure.
- Financially exposed (60 – 79) – Many households in this group earn low income, but most manage their finances well, while some earn a lot, but mismanage their finances. Expert financial advice and planning can present opportunities for many households in this category to drift into good financial standing.
- Well financially (80 – 100) – Households in the financially well category are mostly doing the right things and achieving their financial goals. However, the negative challenges associated with Covid-19 and the pandemic have contributed to many of these households moving from financially well categories to financially precarious categories.
In financial difficulty
The majority of those in financial difficulty are made up of households in the lowest income category, earning up to Rand 24,500 per year.
More than half of these households have primary school as the highest level of education in the household, and more than 70% are either unemployed or economically inactive, while almost two-thirds are single women.
Households in this category depend mainly on government subsidies and part-time work, especially in the informal sector.
Almost 75% of financially unstable households are single and more than half of households have a member who has at most completed high school.
Over 90% belong to the low and very low income categories and earn less than R108,500 per year.
These households tend to be a bit younger and although some households depend on more than one subsidy as their main source of income, just over half of financially unstable households depend on wages and salaries as their main source of income – well that very low.
More than two-thirds of households in the financially exposed sector have at least one member who has completed secondary education, while almost 20% have a tertiary education qualification, the highest qualification in the household.
Just under two-thirds of these households have never been married or are single, and a similar proportion are employed. These households mainly earn between Rand 24,501 and R108,500 per year, but some higher income households also fall into this category.
The main source of income is income generated by their own businesses or from wages and salaries.
Almost half of households in the financially well category earn more than R 236,900 per year. Almost half of them have at least one household member who has completed higher education.
Most of these households have a member who is employed, and most of the time is between 25 and 44 years old. The role of higher education and income in the financial well-being of a household is evident in this group. Marital status also plays an important role in the financial well-being of these households, as a large proportion of them are in a relationship.
They are often characterized by more than one source of income, which allows them to benefit from the pooling of financial resources to better contribute to the financial well-being of their household.
Read: Areas of South Africa where people depend more on grants than wages