One money mistake even wealthy South Africans make

Even on a tight budget, South Africans can enjoy luxuries and discretionary expenses, but they need to prioritise planning and savings to avoid being unable to afford necessary expenses.

Although South Africans often believe they will start saving once their salaries increase, the reality is usually quite different.

“The biggest lie we tell ourselves is, ‘I’ll start saving when I’m earning more,’” said Lethukuthula Ngcobo, Product Manager at FNB Integrated Advice.

“However, the truth is that your lifestyle will always rise to meet your income, unless you tell it not to.” Whether South Africans earn R5,000 or R50,000, the pressure to spend will always be there, Ngcobo explained.

The problem is that, as individuals earn more, their expenses also tend to go up. This is a phenomenon known as “lifestyle creep”.

“Simply put, lifestyle creep is the increase in our expenditure as we earn more money,” said Allan Gray communications manager Twanji Kalula.

Kalula explained that lifestyle creep is slow-moving and often results from numerous small spending adjustments over time. However, it could also happen suddenly after a big life change or purchase, like having a child or buying a home.

“While a degree of lifestyle creep is expected as we earn more, additional cash flow is often channelled entirely into funding new expenses, with little consideration for long-term investment goals,” he said.

“As products and services that may have been considered aspirational or out of reach become increasingly affordable, they may begin to feel like necessities – fuelling lifestyle creep.”

Kalula warned that this impacts the amount South Africans have available for saving and investing, eroding their ability to build wealth.

“An unwieldy lifestyle creep can result in our expenses outpacing our income. At first, we may find ourselves living from payday to payday, but left unabated, many of us then fall into a debt spiral to sustain our ongoing lifestyle costs,” he said.

“The compounded cost of expensive debt further fuels lifestyle creep and is one of the reasons many investors never meet their long-term financial goals.”

Small changes make a big difference

Ngcobo said the important thing is to give every rand a role. While South Africans may think saving means depriving themselves, it means being clear about what matters to them and ensuring their money supports that.

Even allocating a small amount, such as R200, every week into a “fun” fund can allow South Africans to enjoy an activity or make a purchase they want every month.

“It’s not even about the amount,” Ngcobo said. “It’s about knowing that you planned for joy, instead of regretting it later.”

Navigating responsibilities around friends and family can also make it difficult to stick to savings and budgeting goals. However, these obligations must be balanced against financial self-preservation.

“Set yourself a giving limit,” Ngcobo advised. “Treat it like any other expense, allocate what you can afford without compromising on your goals.”

“If it’s R300, let that be your monthly support budget. Anything more must come with a conversation, not just obligation.”

While it may be challenging to stick to a saving goal, Ngcobo explained that there are small, practical ways to achieve these targets.

First, users can check their banking apps to see how much they spend on items such as takeaways or subscriptions.

Certain banks also offer intelligent budget alerts and features that let users create saving goals. These tools can help users monitor spending and stick to budgets.

Ngcobo also suggested implementing “No-spend Weekends.” Instead of going out, people can have a picnic or a games night at home.

Finally, she suggested that South Africans automate their savings by setting up a scheduled transfer that moves money into a separate savings pocket the moment they get paid.