R45 000/month – How much money you need to ‘survive’ comfortably in SA

Very few South Africans will succeed in earning R45 000 per month in wages, but the rapidly rising cost of living means this is how much most would need to survive while earning a comfortable living and in retirement.

Consumers have diverging ideas about what it means to survive financially says Gareth Price, founder of both Cloudworx and Investmint and CFO at BackaBuddy.

“Households should prioritise the basics, such as food, rent, transport, electricity, education, burial insurance, debt repayments, basic hygiene and medical products that add up to R7,000 to R9,000 per month.”

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How much to move into the middle class?

Price, writing for Justmoney, says consumers who want to move into the middle class, find that school fees and rent become more expensive, or you may choose to buy a car rather than relying on public transport.

“To add to these expenses, you could decide to become a member of a medical scheme and perhaps invest in a savings plan. Now, you need an income of between R35 000 and R45 000 per month.”

However, the vast majority of South Africans earn less than R3 500 per month and only the top 1% earn around R45 000. Compare this then to a government pension grant of R1 890 per month or R1 910 if you are older than 75.

If you want to retire sustainably and securely in South Africa, you will need at least 20 to 30 times your required annual expenses as accumulated capital over your lifetime, Christelle Louw, advisory partner at Citadel, says.

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Average salary

According to Statistics South Africa’s employment report for the fourth quarter of 2021, the average worker’s salary in South Africa is R23,982 per month or R287 784 per year.

This means that you will require a minimum of R5 755 680 (R287,784 multiplied by 20) for a sustainable retirement.

Louw says only 6% of the population achieve this kind of financial independence, while 94% will not be able to sustain their income from their savings. This means that they will have to adjust their lifestyles downwards during retirement, such as moving to a smaller home.

Shafeeka Anthony, marketing manager of JustMoney, points out that the Covid-19 pandemic, job losses, and price hikes for household goods and services exacerbated many people’s already perilous financial situations.

South Africans have numerous concerns, from security, electricity and transport, to quality education for their children.

“It is absolutely vital to assess your financial situation honestly and put a plan in place by getting back to basics and focusing on essentials to cope with present needs, let alone growing investments for when they can no longer work.”

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How to make ends meet

Anthony says consumers should:

• Draw up a budget to track money coming in compared to regular monthly bills and variable expenses. Start with bank and credit card statements, and soon you will see where your money goes and where you can cut back to survive.
• Forget brand loyalty and rather draw up a weekly shopping list. Buy your supplies where you will get the best value. Try out a different grocery brand and you may be pleasantly surprised at the savings. Also avoid popping into convenience stores for a few items, as you pay more for this convenience.
• Reduce your debt. Debt is acceptable if it is for a home loan to buy your own property, but it is bad it you borrow money to buy the latest gadgets. If more than a third of your income goes to paying your debt and you have to take out loans to get through the month, get help from professional debt review companies.
• Save, even if it is only a small amount every month. If for example, you stop buying coffee take-outs and cancel a gym membership that you hardly use, you can save these amounts in a separate account. You will be surprised at the total over a year.
• Build an emergency fund with at least three months’ income that will ensure you do not need to take out a loan for emergencies.
• Check your medical aid to see if it still meets your needs and make sure you know enough about its benefits.
• Maintain your insurance premiums as it is always best to prepare for life’s unexpected events. Shop around for the best deal but insure your property and vehicle with a reputable company that will pay out when required.
• Grow your income sources with additional part-time work, such as book-keeping or teaching English. Online learning also made it easier to build your skills and qualifications to help you with new ways to boost your income.
• Stay money-motivated by checking how well you manage to stick to your budget and reward yourself if you do.

“When you have become used to a certain standard of living, the idea of making changes can feel very uncomfortable at first. Taking on debt or eating out regularly may seem completely normal, but making some changes is the only way that many people will be able to cope with the rising cost of living and still have funds left over for retirement,” Anthony says.