South Africans appear to be feeling more positive about their household finances, and credit usage may be slowing, but there are ongoing concerns about inflation and the rising cost of living.
Year-on-year CPI inflation was 4.4% in August, up from 4.3% in July, but down from 5% in June. Rocketing fuel prices are the main reason inflation remains high. According to the Fuels Association of SA, petrol sells for about R30/litre compared with R21/litre in October 2025 (a rise of 43%) and diesel is up by a whopping 68% (from about R19 to R32/litre) over the 12 months.
Despite these worrying figures, and the fact that the South African economy shows little real growth, consumers appear to be more confident about their financial security than a year or two ago, and it seems that, among younger generations especially, this may be linked to better money management and improving levels of financial education.
Sanlam recently published its annual Financial Confidence Index (FCI) report, based on fieldwork done in May involving 1 502 mainly urban respondents aged 20 to 70 years, with an income of at least R1 000 per month. The index has three components: financial self-determination (“Do I know what I am working towards, and am I following through?”), financial resilience (“Can I keep going even when money gets tight, or something unexpected happens?”) and financial wellbeing (“How secure and emotionally settled do I feel about money, now and in the future?”).
The report shows that South Africans’ financial confidence rose to 54 points (out of 100) from 53 last year, its highest level since the index was launched in 2022. Although almost two-thirds of respondents (64% as against 49% last year) said they felt in control of their finances, less than half (49%) said they could weather a financial setback. Gen Z topped the rankings, with a score of 61, followed by Millennials (55), Gen X (49) and Baby Boomers (47).
There was a fairly marked change in South Africans’ use of credit, with fewer respondents reporting having credit products: personal loans fell from 34% to 29%, bank overdrafts from 24% to 20%, and vehicle finance from 19% to 16%, while store credit remained steady year-on-year at 60%. Home loans, which can be seen as “good debt”, were down from 21% to 14%, pointing to a drop in people buying property.
The findings suggest a positive shift in how people are managing their money. Nearly two-thirds (65%, versus 63% in 2025) of respondents said they have written financial goals, although only 43% (unchanged from 2025) track their progress on these goals.
This shift is largely generational: Gen Z recorded the highest overall financial confidence score at 61 and scored highly on self-determination (73). About 80% of Gen Z respondents have written-down financial goals, and the generation is more likely than older South Africans to focus on improving earning power and seeking financial advice, according to the report.
“South Africans seem to be getting better at managing pressure, but there is very little room for error,” says Kele Boakgomo, behavioural scientist and CEO of Yugrow. “The data suggests people are adapting to difficult circumstances, becoming more deliberate about financial decisions and focusing on what they can control. But many households remain vulnerable when something unexpected happens.”
The difficult economic conditions may be forcing consumers to be more responsible in prioritising their spending. Tshepo Mogotsi, Group Head of Brand at Sanlam, says: “Across income groups, participants consistently prioritised groceries, school fees, insurance premiums and transport costs ahead of discretionary spending. Eating out, travel and entertainment were among the first expenses to be cut when money became tight.”
High earners are taking on more debt
A survey of consumers applying for debt review shows that debt is increasingly a middle-class problem. Higher earners are under significant debt pressure. According to DebtBusters’ Q2 2026 Debt Index, applicants taking home more than R50 000 a month were, on average, needing 103% of their income to make their debt repayments. Across all applicants, the share of take-home pay required to service debt is 64%, down from a peak of 73% in Q1 2021. A high proportion of debt among these debt-burdened consumers is unsecured debt, such as credit cards, store cards, overdrafts and personal loans.
Benay Sager, executive head of DebtBusters, says the longer-term lending picture suggests that credit risk is increasingly concentrated among fewer consumers. “Over the past decade the average unsecured loan size has increased, while the number of loans has decreased. This means larger unsecured loans are being granted to fewer consumers, concentrating credit risk within an ever-smaller group.”
Sager says DebtBusters has seen increasing use of its online debt management tools among consumers who have not necessarily reached the point where they need counselling. “Younger consumers are driving this trend, signalling growing interest in accessible tools for managing debt,” he says.
