The current situation of working South Africans is characterised by major financial pressures. But despite these considerable pressures, a strong sense of determination and optimism prevails.
The use of earned wage access, buy-now-pay-later services, having outstanding credit card debt, and feeling embarrassed to ask for help or guidance were some of the key findings of Nedbank’s NedFinHealth Monitor Report.
“Additionally, the combination of a 7 percentage-point decline in the number of working South Africans reporting high to extreme financial stress, down to 32% in 2024, along with an improvement in financial health, contributed to a rise in mental health, which increased by 2,8% points to 64,7%,” says Dr Frank Magwegwe, executive for financial wellness and advisory at Nedbank.
The bank’s annual research study monitors and tracks financial health using eight indicators grouped into four key categories (spend, save, borrow and plan).
“Our findings clearly show the impact of increases in the cost of living, with a rise in the reliance on credit to manage day-to-day finances. The use of other loans, such as money borrowed from loan sharks and from family or friends, increased by 7,1 and 6,9 percentage-points to 31,1% and 43,8%, respectively, in 2024.
“The report also found that 64,4% of working South Africans reported having short-term savings in 2024, an increase of 15,1 percentage points. While this is pleasing, nearly 40% of those with such savings have less than R5 000 saved, hence the reliance on credit due to insufficient short-term savings,” adds Magwegwe.
Another finding unearthed by the Monitor was South Africans experiencing a marginal but significant change in their financial health in 2024, up 1,7 percentage-points to 54,8 out of 100, driven by a rise in all forward-looking indicators reflecting future-focused aspects of financial health such as having long-term savings, a prime credit score, the ability to plan ahead, and having sufficient insurance cover.
Lizzy Mogale, managing executive for insights and advisory at Nedbank Retail and Business Banking, elaborates: “The findings on emergency savings suggest the need for systems-level change from the industry, employers, and policymakers to help working South Africans set aside more money for emergencies, given the important role of emergency savings as a cornerstone of financial health. Emergency savings serve as a buffer against unexpected expenses and reduce reliance on debt.”
Day-to-day financial health indicators reflecting routine financial behaviours that contribute to an ongoing stable financial position such as spending less than income, timely bill payments, and manageable debt levels all weakened somewhat while having short-term savings strengthened. The divergence between the day-to-day and forward-looking financial health indicators shows that the impact of day-to-day financial pressures was offset by growing confidence in future financial expectations.
“The NedFinHealth Monitor provides actionable insights to improve financial health. For example, our findings clearly show that psychological factors like financial control and self-rated financial knowledge, as well as behavioural factors like checking credit reports, using professional financial advisers, and using personal financial management tools, are key to financial health,” says Mogale.
The key findings from the NedFinHealth Monitor Report are:
- Financial satisfaction – Financial satisfaction strengthened by 7,5% points to 53,5 in 2024, indicating improved contentment with their financial situation among working South Africans. Financial satisfaction refers to an individual’s overall contentment with their financial situation.
- Job satisfaction – Job satisfaction increased by 4,4% points to 62,2 in 2024. Job satisfaction refers to the emotional response to one’s job and is influenced by aspects such as pay, autonomy, relationships, and work conditions. Research suggests there is a bidirectional relationship between job satisfaction and financial health.
- Self-rated financial knowledge – Self-rated financial knowledge strengthened by 4,5% points to 69,2 in 2024. “Self-rated financial knowledge is an individual’s assessment of their financial knowledge and confidence, which influences financial behaviour, often irrespective of actual financial knowledge. Both objective (actual) and self-rated financial knowledge are important for financial health,” says Magwegwe.
- Strategies for coping with financial stress – Findings show that working South Africans employ diverse strategies to manage financial stress. The most common approaches include adjusting spending habits, using savings, and finding additional sources of income. However, more severe measures, such as borrowing from informal lenders (12%), selling valuables (11%), or accessing payday loans (10%), suggest deeper financial stress or barriers to accessing other measures to manage financial stress. ‘The lower percentages for seeking professional advice (7%), debt counselling (5%), and consolidation loans (3%) suggest these options may be underutilised, possibly due to stigma, lack of awareness, embarrassment, or other barriers to seeking help with finances,’ says Mogale.
Other findings from the survey include:
- Areas of life that cause the most stress: Financial or money matters, down 8 percentage points to 51% in 2024; relationships, up 3 percentage points to 13% in 2024; health concerns, down 5 percentage points to 14% in 2024; and my job, up 7 percentage points to 14% in 2024.
- Matters that cause financial stress: Struggling to pay bills each month, down 8 percentage points to 26% in 2024; and financially helping others, up 6 percentage points to 22% in 2024.
- Experiences of financial hardship: Worry that food would run out before the ability to buy more, down 9 percentage points to 33% in 2024; cut the size of meals or skip meals because there is no money for food, down 4 percentage points to 20% in 2024; moved my children to a more affordable school, up 3 percentage points to 19% in 2024; and struggled to keep my lights on in my home, up 4 percentage points to 18% in 2024.
- 45% find it embarrassing to ask for help or guidance with finances, down 6 percentage points in 2024.
- Use of payday loans, down 6.8 percentage points to 54.3% in 2024.
- Use of earned wage access (EWA), up 10.1 percentage points to 40.2% in 2024. EWA enables workers to access a portion of their earned wages before the scheduled payday.
- 44% of working South Africans reported using buy-now-pay-later services (BNPL). 49% of these users admitted that BNPL leads to buying more than they would if paying upfront; and 51% expressed regret over their BNPL purchases.
- Top financial goals in order: Starting or growing a business; saving for children’s education; saving for retirement; building emergency savings; covering basic living expenses; and paying off debt