Why earning more is not enough to fix South Africans’ financial stress

That is the broad picture emerging from a cluster of recent studies, including Franc’s inaugural Wealth Index, TransUnion’s latest Consumer Pulse Study and new commentary from earned wage access platform Paymenow.

Together, the findings suggest that while incomes matter, habits may matter more.

Franc’s Wealth Index, based on responses from 3,952 financially active South Africans, found a median score of just 45 out of 100. In plain terms, many households are neither collapsing nor thriving, but stuck in the uncomfortable middle.

The report’s sharpest conclusion is that behaviours such as budgeting, saving regularly, managing debt and planning ahead often outperform age, education and income as predictors of financial wellbeing.

Dr Thomas Brennan, co-founder and CEO of Franc, said many people assume that higher earnings automatically solve money problems.

“What the report showed for me… is the moment you’re able to put in place the habits, like saving regularly, tracking your expenses, keeping debt manageable and developing a financial plan, you see a disproportional improvement in financial wellbeing,” he said.

That may be encouraging news in a country where salary growth is uneven and unemployment remains stubbornly high. It suggests some gains can come from behaviour changes, even before a bigger paycheque arrives.

The emergency savings hole

If there is one red warning light flashing across the data, it is emergency savings.

Franc found that 87% of respondents did not have enough emergency savings, defined as roughly three months’ income, set aside. Nearly one in four said they could not save anything monthly.

Brennan said this changes how people think and act.

“Once people have emergency savings in place, it allows them to think about investment risk,” he said. “The headspace changes.”

Without a buffer, every surprise expense becomes a crisis – from a flat tyre, a dentist bill and a school cost, to a temporary job interruption. With a buffer, the same event is inconvenient rather than catastrophic.

That makes emergency savings one of the healthiest money habits South Africans could build in 2026, even if the first target is modest.

Debt: the silent handbrake

Debt remains another dividing line.

Franc found that 34% of respondents were carrying high debt burdens, with debt consuming more than 35% of income. Those who were overindebted had a median Wealth Index score of 31, compared with 53 for those managing debt effectively.

That gap is enormous. It reflects how debt can crowd out saving, raise anxiety and reduce flexibility.

South Africans appear to be realising this. TransUnion found that 35% of consumers said they had paid down debt faster over the past three months.

Ayesha Hatea, director of research and consulting at TransUnion South Africa, said households are adapting pragmatically.

“These behaviours reflect a more cautious and intentional approach to money management. Consumers are looking for ways to maintain stability, whether by reducing non-essential expenses, managing debt more actively or setting aside funds for future needs,” she said.

That may be the new consumer mood – less flashy optimism, more spreadsheet realism.

Cutting extras, choosing essentials

TransUnion found that 51% of South Africans had cut discretionary spending such as dining out, travel and entertainment, while 31% cancelled subscriptions or memberships.

These are not earth-shattering changes, or clever viral hacks. It’s as simple as households making changes and trimming costs where they can.

Small recurring expenses often hide in plain sight. Just think of your unused streaming services, impulse delivery costs, convenience shopping, premium data choices and creeping lifestyle inflation.

The households reviewing these costs now may be building room for savings later.

What South Africans should be doing now

The combined data points to five practical habits:

1. Build a starter emergency fund
Forget three months immediately if that feels impossible. Start with R1,000, then one month’s expenses. Marking milestones as you work on your savings will give you a sense of accomplishment and impetus to continue saving.

2. Attack expensive debt first
Credit cards, unsecured loans and store accounts often do the most damage. High-interest debt compounds quietly but aggressively. That means you’re not just repaying what you borrowed, you’re feeding the interest machine every month. Miss a payment, and penalties stack on top.

3. Track spending monthly
You cannot steer a ship you refuse to map, and awareness often fixes waste. Check if your bank app allows you to categorise and track your spending. Some apps allow you to set limits – for example, for groceries – and send you alerts when you have reached 75% of the limit.

4. Automate savings
Automating savings takes the work or effort out of doing the right thing. Even a small debit order helps build consistency, because the money moves before you can spend it elsewhere.

5. Turn goals into plans
Saying you want to “save more” is too foggy to act on, but deciding to save R500 a month towards a R6,000 emergency fund by next April gives the goal shape and urgency.

Knowledge matters, but action matters more

South Africa often frames April as Financial Literacy Month, but information alone does not guarantee results.

Franc found that 64% of respondents rated their investment knowledge as intermediate or above, yet many still lacked emergency savings and retirement readiness.

That gap between knowing and doing may be the real challenge.

Denise Neethling, head of marketing at Paymenow, said financial resilience is about practical decisions, not expertise.

“Financial literacy is not about becoming an expert, it’s about understanding enough to make better choices,” she said. “Knowledge costs nothing; financial mistakes cost everything.”

You cannot control inflation, interest rates or global shocks, but you can control your habits. Sometimes wealth starts not with a windfall, but with cancelling one subscription, paying one debt extra, and saving one small amount today. DM