South Africans are in serious financial trouble

Many South African households are under severe financial pressure as rising living costs outpace incomes, forcing families to cut essentials, rely on debt, and dip into retirement savings just to survive.

Rising costs are hitting households hard: electricity bills are climbing by as much as 12.7%, water and sanitation charges are up 13.9%, and steep hikes in rates and taxes are sweeping across major metros.

Thanks to Eskom’s new Retail Tariff Plan, some households are also facing electricity increases of up to 80%, with added daily fees and capacity charges piling on the pressure.

According to TransUnion, 21% of consumers said their household income had decreased in Q2 2025. Although most South Africans were hopeful that their incomes would grow in 2026, nearly 39% of consumers reported that they expect they might miss at least one bill or loan payment in the near future.

In light of this environment, more than half of consumers (54%) trimmed back on non-essential expenses like dining out, entertainment and travel.

Many also took steps to strengthen their financial security; 31% paid down debt faster, 24% put more into emergency savings or stokvels, and 37% planned to increase their retirement or investment savings.

Sebastien Alexanderson, Head of National Debt Advisors, said people aren’t failing to save because they’re irresponsible. They’re failing to save because there’s nothing left to cut.

“We’re seeing families who’ve done everything right with no luxury spending, strict budgets, paid-off cars, and yet they’re still drowning,” Alexanderson said. “Telling people to just ‘budget better’ is starting to sound more like blame and not advice.”

According to the latest Cost of Living data from Eco Flow, a family of four in Johannesburg now needs over R41,000 a month to get by before rent.

In Cape Town, rent for a modest three-bedroom apartment can exceed R25,000. Even Bloemfontein, which is considered one of the most affordable cities, has seen monthly living costs rise to R37,000 for a family of four.

“Compare that to average monthly salaries in Johannesburg, Cape Town, Durban, and Pretoria, which range from R18,000 to R28,800; even two incomes often aren’t enough to meet basic living costs,” Alexanderson said.

“This isn’t a reflection of poor financial decisions, but of a system that’s become unaffordable for ordinary South Africans.”

Budgets are shrinking

The truth, Alexanderson said, is that most households have already tightened their belts and cut discretionary expenses like DStv.

“We see it every day – clients who’ve slashed every non-essential. Their grocery list is bare, the car is paid off, and still, they can’t save R100 at month-end.”

As a result, even necessary expenses are being cut. For example, research by Liberty revealed that half of all working South Africans aren’t saving for their retirement.

This has real consequences, since only 6% of South Africans can afford to retire comfortably. Other South Africans are forced to keep working, rely on friends and family, or cut back heavily on expenses in their older years.

Even South Africans who are saving for retirement are feeling the strain, with many people dipping into their two-pot savings to make ends meet.

At the end of January 2025, the South African Revenue Service (SARS) announced that it had received 2.66 million applications for tax directives for withdrawals.

Of these, 2.40 million applications were approved, and a gross lump sum of R 43.42 billion had been paid out until then.

FNB’s 2025 Retirement Insights Survey revealed that these funds were mainly used for day-to-day expenses (48%) and paying off debt (46%). This was followed by education fees (30%) and unforeseen expenses (26%).

The latest Consumer Report from National Debt Advisors also revealed that out of 60,868 consumers under debt review, over 94% don’t own a car, and 95% don’t have a home loan.

These are not people drowning in asset-based debt, Alexanderson said. They’re drowning in unsecured credit used to survive day to day.

More than 40,000 consumers are juggling three or more unsecured loans, and some are managing up to 34 separate loans.

Credit card debt is equally widespread, with over 30,000 clients holding at least one, while nearly 9,000 people have multiple personal loans, some up to 17.

Over 40,000 consumers also carry store accounts, often used to buy clothing, groceries, or basic household items when cash runs out.

With only 691 clients using overdrafts, it’s clear that most consumers are already beyond the financial limits traditionally offered by banks, he added.

According to Alexanderson, South Africans need realistic, adaptive tools to help them navigate this difficult financial situation. These include:

• Micro-saving tactics: Small changes like rounding up purchases and joining flexible savings clubs for emergencies can help build a cushion without overwhelming a budget.
• Income patching over austerity: Supplementing income by selling unused goods and using prepaid electricity and airtime tricks can be more effective than extreme cutbacks.
• Rebudgeting around billing cycles: Adjusting payment dates and knowing when and how to dispute tariffs can improve cash flow and reduce monthly financial pressure.
• Emotional budgeting support: Access to free mental wellness tools and non-judgmental debt counselling can help restore confidence and control when money stress feels overwhelming.

With budgets as tight as they are, even small changes can have a noticeable effect on improving household finances.