For many South Africans, debt has quietly shifted from being a financial tool to becoming a means of simply staying afloat from month to month.
“The greatest financial risk facing many South Africans is not that they have debt. It is that they are using debt to finance their current lifestyle rather than to build their future wealth,” says Thys van Zyl, Chief Executive Officer of Everest Advisory Services (Pty) Ltd (FSP 49495, CAT I).
“Nedbank’s latest financial results show that more households are struggling to service their debt. This confirms that financial pressure is spreading throughout the economy.”
Where credit was once primarily used to purchase a home, start a business or finance higher education, it is now increasingly being used to pay for everyday expenses such as groceries, electricity and even existing debt.
Van Zyl believes this shift should serve as a wake-up call for every household.
“Debt Busters’ Money-Stress Tracker for 2026 shows that financial pressure on South African households is increasing, with many families struggling to keep up with rising living costs. Inflation, higher interest rates and increasing prices for essential services continue to place significant pressure on household budgets. At the same time, South Africa’s household savings rate remains structurally weak, while consumers continue to face sustained cost-of-living pressures.”
The real concern is not necessarily how much debt people have, but rather what that debt is being used for, says Van Zyl.
“Not all debt is bad. There is an important distinction between debt that helps build wealth and debt that consumes future income. A home loan or business loan can create long-term value, while other forms of debt, such as credit cards, personal loans and retail accounts used to finance monthly living expenses, are unlikely to improve a person’s financial position.”
This often means that households begin each month with less disposable income because a growing portion of their earnings is already committed to interest and debt repayments.
“Over time, this makes it increasingly difficult to save, invest and build financial resilience. People rarely find themselves in financial difficulty overnight. It usually happens gradually. A credit card is used to get through one month, followed by a personal loan. Eventually, even more credit is used to service existing debt, until a household is no longer working towards building wealth but simply working to repay debt. In this debt spiral, new credit is often used to service existing debt instead of creating new value.”
According to Van Zyl, the first step towards financial security is not necessarily earning a bigger salary.
“Every rand used to pay off expensive short-term debt improves your future financial position. Paying off high-interest debt first is probably one of the best investments a person can make.”
One of the main reasons people repeatedly fall back on debt is the absence of an emergency fund.
“When a vehicle needs repairs or an unexpected medical expense arises, credit often becomes the only option. An emergency fund covering three to six months’ worth of expenses can help break this cycle. Even small, consistent savings can make a meaningful difference over time.”
Van Zyl says it is understandable that consumers may rely on credit during difficult economic times.
“However, when debt becomes a permanent part of a household’s survival strategy, it begins to steal future financial freedom. Lasting wealth is not built by continuously borrowing more money, but by managing debt responsibly, developing disciplined saving habits and deliberately ensuring that more of your income works for you every year.”
“When debt starts dictating how you live, it is often the right time to review your financial plan with a qualified financial adviser before temporary financial pressure causes permanent financial damage.”
Important Notice And Disclaimer
General Information
This press release is provided for general information and educational purposes only and does not constitute financial advice, investment research, or a recommendation as defined by the Financial Advisory and Intermediary Services Act, 2002 (FAIS Act). The content reflects the personal views and economic commentary of the author and should not be relied upon as the sole basis for making any investment or financial decisions.
Forward-Looking
This document contains forward-looking statements and projections regarding economic conditions, market performance, policy developments, and geopolitical scenarios. These statements are based on current information, analysis, and assumptions which may prove incorrect. Actual outcomes may differ materially from projections or scenarios discussed herein. No guarantee is provided regarding the accuracy of forecasts, and readers should not place undue reliance on forward-looking statements.
Author’s Capacity
This document represents the personal views of Thys Van Zyl in his capacity as Chief Executive Officer of Everest Advisory Services (FSP No. 49495, CAT I), which forms part of the Everest Wealth Management Group and constitutes economic commentary based on publicly available information and professional experience. It does not represent institutional investment research, formal product recommendations, or the solicitation of financial services.
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