South Africans struggling to keep up with mounting debt

South Africans are facing significant financial challenges as they struggle to make ends meet amidst mounting debt and economic uncertainties. The latest findings from the NedFinHealth Monitor have highlighted the reliance of many South Africans on credit, including formal credit such as credit cards, payday loans, and personal loans, as well as informal debt, often borrowed from friends and family or loan sharks. Dr. Frank Magwegwe, Nedbank Executive for Financial Wellness and Advisory, discussed the concerning data in a recent interview with CNBC Africa. The report revealed that a large percentage of South Africans are finding it difficult to pay their bills on time, with 42% admitting that their debt has become unmanageable. Dr. Magwegwe emphasized the importance of understanding that money is more than just numbers; it has a significant impact on an individual's psychological well-being. The report's four pillars focus on saving, borrowing, spending, and planning, providing a comprehensive guide for improving financial health. One of the key themes that emerged from the interview was the difference in financial habits between individuals with high and low levels of financial health. Dr. Magwegwe highlighted that those with higher financial health prioritize spending less than they earn, saving for emergencies, planning for the future through various financial instruments, and regularly checking their credit reports. These habits contribute to a sense of peace of mind and financial security. The impact of financial stress on mental health was also addressed in the interview. Dr. Magwegwe noted that worrying about money can have far-reaching consequences beyond bank accounts, affecting mental well-being. He attributed this stress to a combination of low financial education and poor financial management skills. Developing positive financial habits, such as saving regularly and accessing credit reports, can help alleviate financial stress. As South Africans grapple with rising inflation and interest rates, Dr. Magwegwe discussed the potential for sentiment improvement in the short to medium term. He emphasized the importance of optimism in financial health and highlighted the expectation of stable interest rates and the growth of side hustles as potential drivers of improved sentiment. In conclusion, the interview shed light on the financial challenges facing many South Africans and the importance of developing healthy financial habits to navigate these difficulties. With a focus on education, planning, and optimism, individuals can work towards improving their financial well-being despite the current economic challenges.