NDCA claims many South Africans cannot save due to rising expenses and debt

The debt burden of households in South Africa has significantly increased, reaching a colossal figure of 2.4 trillion rand, forcing citizens to reassess their financial management strategies and pay more attention to savings.

Consequences of Rising Expenses

As South African families face the rising cost of living, the debt burden has reached an alarming level of 2.4 trillion rand. According to the latest data from the National Credit Regulator, this serious trend has resulted in 4.9 million consumers having damaged credit records, and another 6.3 million struggling to repay their debts.

Debt Management Advice

Tina Manyanya, a representative of the short-term lender Wonga, advises that despite the seemingly insurmountable debt situation, small and regular changes can lead to significant improvements over time. She emphasizes that improving one's financial standing does not happen instantly but requires gradual and targeted efforts to increase resilience against financial pressure.

Practical Steps to Reduce Debt

To help South Africans achieve financial stability, Manyanya proposed five actionable methods that are easy to integrate into daily life. Firstly, it is necessary to understand where the money is going: she recommends analyzing bank statements, creating a realistic monthly budget, and prioritizing essential expenses over non-essential ones. This approach helps identify unnecessary spending that can be directed towards debt repayment.

Secondly, when interest rates decrease, one should maintain the same monthly payment amount. This ensures that a larger principal amount is repaid, which ultimately leads to a reduction in the total amount of interest paid and a faster closure of loans. Thirdly, to avoid accumulating high-interest credit card debt, it is recommended to pay off the entire balance each month, rather than just the minimum payment, to prevent compound interest from growing.

Fourthly, Manyanya presents the 'snowball method' for managing multiple debts: one must first focus on paying off the smallest debts with high interest rates, such as credit cards and personal loans. After closing them, the funds previously allocated to these payments can be used to tackle larger debts, such as car loans or mortgages. Finally, it is crucial to create and adhere to a realistic monthly budget, as such a plan is not merely a restriction but an active tool for financial management, promoting conscious spending and progress toward financial goals.

The Importance of Savings Month

Manyanya stresses that the National Savings Month is a timely opportunity for South Africans to review and improve their financial habits. She concludes that any positive step—whether reducing debt, starting a saving habit, or increasing financial literacy—brings a person closer to greater economic security.

In July, which is observed as Savings Month, consumers are strongly advised to strengthen their financial well-being. This is achieved by forming sustainable saving habits, increasing financial literacy, and making informed financial decisions.

Economic Situation and the Need for Savings

Amid rising costs of living and increasing household debt burdens, even modest savings can help families prepare for unforeseen expenses, achieve set financial goals, and reduce stress levels. South Africans face difficulties in regular saving, making them vulnerable to emergencies such as medical expenses, job loss, or unplanned family expenditures.

Calls for Financial Education

Dr. Ivan Meyer, a member of the Western Cape Agricultural Economic Development and Tourism Executive Committee, emphasized that financial education is an empowerment tool. He noted that understanding concepts such as budgeting, responsible borrowing, and long-term saving allows people to take control of their finances, increase resilience to financial shocks, and secure a better future for themselves and their families.

Recommendations for Consumers

Savings Month aims to raise awareness about the importance of building emergency funds, setting achievable financial goals, and incorporating savings into daily financial planning. Meyer urged consumers to take several actions: create and stick to a monthly budget, set realistic saving targets, regularly set aside funds regardless of the amount, build an emergency fund, avoid unnecessary debt and impulse spending, and continuously improve their financial knowledge.

The Role of the Consumer Protection Agency

Meyer also stated that financial stability is determined not by a person's income size, but by the effectiveness of managing and protecting their resources. Creating a culture of saving contributes to greater financial stability, independence, and peace of mind. The Consumer Protection Agency plays an important role in this process by promoting financial well-being through education, information campaigns, and guidance on making responsible financial decisions. The Agency helps consumers understand their rights and obligations, avoid fraud and unfair practices, and develop practical money management skills.

Practical Steps to Improve the Future

As part of Savings Month, Meyer calls on consumers to take at least one practical step to improve their financial situation: review their budget, identify unnecessary expenses, start building an emergency fund, and commit to saving a small amount every month. Consumers are also advised to use free financial education resources and seek information before signing any financial agreements or taking out loans. Meyer concluded that every saving decision, no matter how small, contributes to greater financial security and sustainability.

Despite expanded access to banking services, nearly half of South Africa's residents continue to keep their savings in cash at home, exposing themselves to risks of theft, fire, and lost opportunities. Experts point out that the main obstacles to using formal savings instruments remain issues of trust, accessibility, and established financial habits.

The Scale of the Savings Problem

According to data from the FinScope South Africa survey by FinMark Trust and the World Bank Global Findex database, approximately 7.3 million adults in South Africa remain unbanked. Simultaneously, almost half of consumers prefer to keep their savings in cash, reflecting a combination of limited access, trust concerns, and ingrained saving behaviors, rather than just personal preference.

Physical and Financial Risks

The key problem remains the threat to security. In South Africa between 2024 and 2025, about 1.5 million burglaries were registered (according to Stats SA, 2025), demonstrating the vulnerability of physical money outside official systems. Cash kept at home also risks damage from fire, flooding, or simply being lost, with no possibility of recovery.

In addition to physical threats, there are long-term financial consequences. Cash savings kept at home do not earn interest and are often spent more easily, reducing households' ability to build stable savings or withstand economic shocks in a constrained economy.

The Need for Improved Financial Solutions

The continued reliance on cash savings indicates a deeper problem within the financial system itself—the need for savings solutions that are simultaneously flexible, accessible, and allow funds to be used immediately when needed. Where these needs are not met, informal methods continue to fill this niche.

Although keeping money at home is often driven by real concerns about access, trust, and control, it also puts people at risk and limits the potential growth of their funds. There is a need for formal savings instruments to better align with people's daily realities.

Banking Sector Proposals

Banks offer various products that provide consumers with savings benefits, such as flexible access to funds without early withdrawal penalties and competitive interest rates that encourage long-term saving habits. However, the implementation of these solutions is uneven.

The company's main goal is to help South Africans change their attitude towards money and rethink its role in daily life. Therefore, the company continues to refine savings solutions that balance easy access to funds with the potential to grow savings over time, including the absence of monthly or service fees and immediate access to savings without penalties.

The Future of Formal Savings

As more South Africans face these issues, a broader problem becomes evident: what is required for formal savings to feel as immediate, accessible, and secure as keeping money at home? Can formal savings tools completely replace informal, cash-based habits that dominate many communities?