How much money do you need to be a middle class in South Africa

With the cost of living rising rapidly, it may not be clear how much money South Africans need to survive, whether they are earning a living or in retirement. The costs can also increase significantly when you consider how much it costs to live a more traditional “middle-class lifestyle” in South Africa, says personal finance site JustMoney.co.za.

Gareth Price, founder of both Cloudworx and Investmint and chief financial officer of BackaBuddy, says people have different ideas about what it means to survive financially.

He noted that, in general, families should prioritize basic items, such as food, rent, transportation, electricity, education, burial insurance, debt repayment, basic hygiene, and medical products. On average, these costs amount to R7,000-R9,000 per month, she said.

“If you want to move into the middle class, tuition and rent become more expensive and you may choose to buy a car rather than rely on public transport. Additionally, you can seek medical assistance and perhaps invest in a savings plan. Here you are looking at a income between R35,000 and R45,000 per month“Price said.

He noted that the vast majority of South Africans earn less than R3,500 a month, with only the top 1% earning around R45,000. To put it in context, a state retirement pension grant offers a maximum of R1,890 per month, or R1,910 if you are over 75.

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

What it takes to be middle class

Recently deceased Brenthurst Wealth Consulting economist Mike Schuessler was one of the leading voices of the middle class living in South Africa.

In an April research note, Schuessler noted that there is no single universal definition for “middle class,” with the relationship instead centering on the group of people who would be, at least, those who work.

“The percentage of people working in South Africa is one of the lowest in the world. In 2020, according to the World Bank, less than 36% of the South African population over the age of 15 was in work. Since 2020, South Africa appears to have fallen by around 200 basis points to less than 34% using the latest figures from the Quarterly Labor Force Survey, “he said.

Unemployment in South Africa rose to a record 35.3% in the 4th quarter of 2021. The number of unemployed rose from 278,000 to 7.9 million. This should be of great concern not only to the government of South Africa, but to every single citizen. If this trend continues, as it seems, the unrest we saw in July 2021 will be the tip of the iceberg. “

Currently, about two-thirds of South African employees work in the formal market, which is relatively high for a workforce in the developing universe, Schuessler said.

However, due to so few working, it means that overall, fewer than 25 percent of adults over the age of 15 actually receive a regular salary from a formal employer, excluding domestic and agricultural workers, he said.

In most countries, the person earning a typical salary would pay personal income tax, but this is not the case in South Africa, Schuessler said. This effectively means that those who pay personal income tax can be considered upper-middle class, she said.

“However, this does not translate into being rich, as the upper middle class is then effectively classified as a worker earning a annual income above just R87,000. The irony is that many of the top 10% of income in South Africa would fall into the lower middle class in many other countries. “


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