December salary warning for South Africans

This year, many South Africans will receive their December salaries on the 13th, which means they will have to navigate around 49 days before getting their next paycheque.

For those who typically get paid on the 25th, the payday gap will increase from about 42 to 49 days, a full extra week.

Kabelo Makeke, head of personal and private banking at Standard Bank South Africa, warned on the Kaya Biz podcast that South Africans should be weary of their December spending.

Typical spending patterns for the year tend to shift “quite drastically” in December, which means that people need to be especially careful and remember that they still have enough money left to navigate January.

Makeke said the 49-day payday gap means that South Africans will have to live for nearly two months without a pay cheque.

“Even though we are very tempted to spend within December, let’s just be worried that there’s January coming through.”

Spending patterns throughout these two months tend to look different, he explained.

While people tend to spend more on things like clothing and home preparations during December, this shifts towards back-to-school expenses, work needs and savings in January.

Spending also tends to look different for people across different income levels.

Lower-income earners prioritise spending on groceries in the lead-up to the festive season and middle-income earners tend to pay their debts upfront and move their debit orders earlier.

High-income earners, on the other hand, focus mainly on travel and related expenses, which include things like holiday insurance.

Young professionals also tend to have distinct spending habits, shelling out more for transport, groceries, restaurants and clothing – especially just before Christmas.

While spending does skyrocket during the festive period, Makeke pointed out that, interestingly, people tend to spend more during November than in December.

This is largely a result of Black Friday deals, which spikes retail expenditure. This year, in particular, saw a large spike in South Africa’s Black Friday spending.

For example, for the first time, Nedbank’s acquiring platform processed over R3 billion in settlements in a single day – an increase of 12.06% compared to the previous record.

The bank also saw an 18% YoY growth in the number of customers transacting this Black Friday, and a 14% increase was recorded in the number of customers transacting online.

The single highest individual transactions were for R3.33 million by a corporate client and R551,128 for an individual.

South Africa’s other major banks also saw increases in Black Friday spending this year.

Standard Bank, told MyBroadband that transaction volumes on Black Friday increased 10.81% year-on-year, while values jumped 4.41%.

This bank also saw the biggest individual Black Friday transaction, with one person spending R758,677 on an international accommodation booking.

In December, people have to consider major holidays such as Christmas and Boxing Day, which only happen towards the end of the month, so they are more careful to ensure that their salary lasts for the whole month.

While they may manage their salaries throughout December, January presents challenges, with many people facing tight budgets due to overspending during the holidays.

In order to navigate the December-January period, Makeke encouraged people to plan their spending.

For those who get a 13th cheque or bonus, set a portion of that aside for January, since that is when “unpredictable” expenses are likely to pop up.

“What happens is come January, we all don’t have money. The main advice is just to try and keep some on the side for January.”

While festive season spending typically remains resilient and consistent each year, there has been a shift towards focusing on needs rather than wants.

“There’s a lot more prioritisation, and that’s driven mainly by what we’ve seen in terms of high inflation and spending.”

Many people now consider necessary expenses – like transportation costs, school fees, groceries, and essential services like water and electricity – before discretionary spending.