South Africans have experienced high levels of financial stress over the past three years, impacting their home and work lives as well as their health. Younger individuals and those with lower incomes are the most anxious, with women particularly bearing the brunt of financial strain. In contrast, older individuals and those in higher income brackets experience less worry but have higher levels of unsustainable debt and are less inclined to seek help.
These insights emerge from DebtBusters’ third annual Money Stress Tracker survey. The data was compiled from responses by 26,000 individuals who are registered with DebtBusters but are not currently receiving debt counseling, making it one of the largest surveys on the impact of financial stress in South Africa.
Benay Sager, Executive Head of DebtBusters, noted a slight decrease in financial stress levels over the past year, from 78% in 2023 to 75% in 2024, though this is an increase from 70% in 2022. “While the data shows a marginal decline, the trend over the three-year period remains upward,” said Sager.
The survey was conducted in June. Contributing factors to the reduced stress included a period without loadshedding and stable interest rates. Concerns over interest rate hikes declined by 22%, and worries about loadshedding fell from 17% to 7% in the same period. “Consumers prefer certainty. Although interest rates are high, consistency is less stressful compared to continuous rate hikes,” Sager explained.
Among the 75% of respondents who reported financial stress, 93% noted it negatively affected their home life, 76% their work life, and 74% their health. Women reported being 10% more stressed about finances than men, with nearly four out of five women indicating financial stress. They also reported being 20% more stressed about their health and 30% more stressed about their home life compared to men.
Psychologist Andrea Kellerman observed that women are more likely to acknowledge and express their stress, partly due to societal expectations of emotional support and family nurturing. Women often juggle multiple stressors simultaneously, leading to heightened stress levels. Additionally, many women now balance roles as both mothers and breadwinners, adding to their financial pressure.
The primary financial concerns for most individuals are short-term issues such as running out of money before the end of the month and managing debt. While the concern of having “more month than money” spans all age groups, 70% of those under 55 report financial worries. In contrast, those 55 and older are less concerned about monthly financial management but are more anxious about retirement. Middle-aged individuals face dual pressures of insufficient funds and debt repayment.
A concerning statistic is that 68% of respondents spend more than 30% of their after-tax income on debt repayments, with 53% allocating more than 40% of their earnings to debt servicing. Generally, consumers are advised not to exceed 30% of take-home pay on debt repayments, with 40% being the maximum.
Older individuals and higher earners are more likely to carry unsustainable debt, with 60% of those aged 45 and above and those earning over R20,000 per month experiencing high debt levels. These groups, while under significant debt pressure, are often reluctant to seek help, citing trust issues as a major barrier. In contrast, 54% of younger consumers show a willingness to address money stress but may lack clarity on available options. Younger individuals often feel embarrassed or uncertain, while those over 35 tend to procrastinate.
Kellerman points out that individuals over 55 may prioritize retirement security over current debt concerns. Long-term exposure to debt stress can lead to a “freeze mode” response, where reduced energy and resilience may cause individuals to ignore their issues.
Younger people, though motivated and adaptable, face challenges such as limited job opportunities and high startup costs. They may feel stuck despite having better financial knowledge compared to previous generations. “The tragedy is that many who could benefit from debt counseling and other debt management resources do not seek help due to a lack of awareness, indecision, embarrassment, or mistrust,” Sager said.
DebtBusters offers various tools to aid consumers, including Debt Radar for debt management and the Debt Sustainability Indicator for making debt repayments more manageable. Plans to launch MoneySavers in late 2024 aim to help subscribers save on everyday expenses.
