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Middle Class People Spending Habit


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Probably the hardest thing you can ask someone today is to control and limit their spending's. It is the hardest thing one can ask anyone. This is probably because it is a sensitive matter.

This would not be an issue, but it is. According to Business Report  FNB has claimed that the South African middle class spend all their salaries within the first 5 days of receiving it (Business Report, 2018). That is a lot of money.

Let me help you understand.

The middle class, according to Justin Visagie (2016), are people who earn between 5600 to 40000 per month after direct tax. If your personal income meets within that criteria then congratulation you are the middle class. Korhonen (2016) believes that on South Africa's population 31% of them consists of the middle class.

Let me show you how bad it is. Majority of 31% of South Africans cannot budget their money. 55% of South Africans are living in poverty. That means only 14% of South Africans have money and just don't use it accordingly.

What is causing this issue? Well according to myself it must be desire. the middle class desire to live like the wealthy, so they meet that life style. The only problem is that lifestyle is way to expensive.
Or maybe
The price for living in South Africa is way too expensive. With the oil prices, transport cost, groceries and inflation in general all shooting up. The cost for living in South Africa is just becoming expensive. Keep in mind this is what I believe.

So the first point I made was spending habits.
Related imageAccording to Heshmat (2018) theres over ten reasons why people spend the way they do. One of the reasons he mentioned was spending addictions, which in psychology it is called impulse disorder disorder (Google it). Others are "the what the hell effect" and even special occasions.
- Shopping addiction is very popular. It occus when individuals buy items they cannot afford, do not need and even are plan ridiculous (Black, 2007). It is an addiction itself and should be treated the same as alcohol and sex addiction. One way to notice this disorder develping within one self is the need to spend and itch to spend in any given chance.
- "The what the hell effect" is something i suffer from. Imagine you draw yourself a budget and you about to get busy living with it. They you blew 1000 bucks on alcohol when it was supposed to be 500 bucks. The "The what the hell effect" comes in when you decide to blow some more since you blown your budget. Or even when you say "My money about to finish anyways". Those are symptoms.
- Special occasion are killers. We tend to blow money on occasions like birthdays or parties. I have seen friends blow their income just on one occasion. The problem is the occasion is for the one day only, you still have 29 days with the cash in that month.

Makanjee (CEO of FNB) asked people to practice financial discipline. Where to him the middle class are people who earn between 7000 - 60000 rands.

"These consumers tend to struggle with money management, with the shortfall leading to sacrifices in important areas such as having back up or emergency saving that can be used to pay for unforeseen expenses. High spending and limited savings cause consumers to rely on credit to get through the month, making them more vulnerable to be caught in a debt trap," Makanjee said.
"For almost 40 percent of such customers, debt repayments make up more than half of their take-home-pay, which we consider to be very high. The main driver of this is large numbers of microlender loans and store cards that consumers take up. The ideal scenario for a consumer is to have one provider who gives them a transactional account and the right type of credit when needed," Nieuwoudt said.

 So how should some budget?

Allocate money to different things you with to. Your debt should not exceed more than 10% of your income, and you will live in something called good debt. Put your some of your money in a personal investment; whether in savings, shares, trading, business and e.t.c. Having a side hustle is probably the smartest thing you can do and you should invest in it. Your living expense should be reasonable and fair, and you should strive to cut your expenses and not multiply it.

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BIBLIOGRAPHY
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  • Business Report. 2018. SA's middle class spends their salaries in less than five days - FNB. [Online]. Available: https://www.iol.co.za/business-report/economy/sas-middle-class-spend-their-salaries-in-less-than-five-days-fnb-18365922 (Accessed on 4 December 2018).
  • Korhonen, M. 2018. Factsheet: measuring South Africa's (black) middle class. Africa Check. [Online]. Available: https://africacheck.org/factsheets/factsheet-measuring-south-africas-black-middle-class/ (Accessed on 4 December 2018).
  • Heshmat, S. 2018. Ten reasons why people spend too much. Psychology Today. [Online]. Available: https://www.psychologytoday.com/intl/blog/science-choice/201801/10-reasons-why-people-spend-too-much (Accessed 5 December 2018).

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