For many South Africans, payday is a stressful experience because of over indebtedness and growing financial constraints.
Simple debt- relief guidance and advice could go a long way to greater peace of mind and fostering long term financial stability and wellness according John Manyike, head of financial education at Old Mutual. There is no doubt that over indebtedness could affect one’s mental health.
According to the Credit Bureau Monitor, nearly half of South Africans have an impaired credit record. The country’s debt to income ratio is about 73 percent, which means 73 percent of disposable income goes toward servicing debt. This means that R73 of every R100 gets taken away to service debt, which is significantly higher than what is considered the healthy global rate of 36%. South African credit active consumers are in intensive care unit as far as debt levels is concerned.
Manyike says the issue starts with most people not being pragmatic about how they manage their money. Dealing with one’s mindset first is very critical. A person must start by firstly accepting that there is a problem, and then should make a conscious decision to live within their means as well as making use of a budget by identifying what is a need and what is a want. You need to psyche yourself up even if it means pretending you earn less than what you actually earn and behave as such when it comes to spending money.
"You can use credit to create wealth. It also does not mean that everyone that has been over indebted fell into that situation because of recklessness or irresponsibility. Circumstances differ from person to person. But there is a large portion of our population that is obviously credit hungry, living in too much debt for both instant gratification and the pressure to be validated via social platforms," said Manyike.