Free Guide about Personal Finance Management in South Africa

Published by The National Debt Review Center on

This is your ultimate guide about Personal Finance Management in South Africa! Learn to budget, save, manage debt, and invest for a secure future. Explore South African financial products & plan for retirement. Take control of your finances today!

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By Sibabalwe Dakana – Registered Debt Counsellor

What Is Personal Finance Management?

Personal finance management is all about taking control of your finances. It’s not just about paying the bills – it’s about managing debt, building savings, and making your money grow through smart investing. Personal finance covers everything you need to reach your financial goals, from creating a budget and using local banks to sorting out medical aid and insurance.

Remember, it’s about your personal dreams, whether it’s that perfect braai with friends in Cape Town or a worry-free retirement. The key is to figure out your financial situation – what you earn and what you owe – and then create a plan (your “budget”) that fits your reality. The more you understand personal finance, the better equipped you’ll be to avoid scams and make smart choices with your money, putting you on the path to a secure future.


  • Budgeting is Crucial. Building a budget is the foundation for taking control of your finances. Track your income and expenses, categorize your spending, and prioritize needs over wants.
  • Develop a consistent savings strategy. Set SMART goals, automate transfers to savings accounts, utilize tax-advantaged options like TFSAs, and build an emergency fund.
  • Don’t let debt control you. Understand your debt, prioritize high-interest debts, explore consolidation options, negotiate interest rates if possible, and seek help from a debt counsellor if needed.
  • South Africa offers various financial products to support your financial goals. Consider RAs for tax-efficient retirement saving, unit trusts for diversified investment, medical aid schemes for healthcare coverage, and short-term insurance to protect your valuables.
  • Start planning for retirement early. The power of compound interest can significantly grow your nest egg. Explore the South African state pension system and choose a suitable RA based on your risk tolerance and investment goals. Consider your desired retirement lifestyle and the financial resources needed to achieve it.

The Importance of Personal Finance Management

Personal finance management is about meeting your personal financial goals. These goals could be having enough for short-term financial needs, planning for retirement, or saving for your child’s college education. It depends on your income, spending, saving, investing, and personal protection (insurance and estate planning).

Not understanding how to manage finances or be financially disciplined has led South Africans to accumulate enormous debt. In February 2024, the South African Reserve Bank reported Households Debt in South Africa decreased to 62 percent of gross income in 2022 from 66.10 percent in 2021. Households Debt to Income in South Africa averaged 52.63 percent from 1969 until 2022, reaching an all-time high of 77.60 percent in 2008 and a record low of 36.00 percent in 1969.

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Transunion reported that;

  • Clothing account originations increased by 36.4% year-over-year in Q1 2023, although the average limit on new clothing accounts only increased by 1.2% over that time. Outstanding balances increased by 6.8%, supported by new business growth, while average balances increased by 6.1%.
  • Consumer demand for new credit cards remained robust, with origination volumes having increased in Q1 2023 by 27.1% YoY. Average limits on new cards declined marginally (0.8%) from the prior year. Originations increased across all generations, with Gen Z consumers (born 1995 to 2010) accounting for 18.9% of the new cards issued, an increase of 3.4% YoY.
  • The South African economy continued to weather the storm during Q1 2023, with GDP growth of 0.4% assisting the country to narrowly avoid a technical recession following a -1.3% decline in Q4 2022. However, within the same quarter the Reserve Bank shocked the market with a further 50 bps increase, bringing the prime rate to 11.25% – the highest level since 2009.
Source: Transunion

Areas of Personal Finance Management

The five areas of personal finance are income, saving, spending, investing, and protection.

Earning an Income

Income is the starting point of personal finance. It is the entire amount of cash inflow that you receive and can allocate to expenses, savings, investments, and protection. Income is all the money you bring in. This includes salaries, wages, dividends, and other sources of cash inflow.


Spending is an outflow of cash and typically where the bulk of income goes. Spending is whatever an individual uses their income to buy. This includes rent, bond repayments, groceries, hobbies, eating out, home furnishings, home repairs, travel, and entertainment.

Being able to manage spending is a critical aspect of personal finance. Individuals must ensure their spending is less than their income; otherwise, they won’t have enough money to cover their expenses or will fall into debt. Debt can be devastating financially, particularly with the high-interest rates credit cards charge.


Savings is the income left over after spending. Everyone should aim to have savings to cover large expenses or emergencies. However, this means not using all your income, which can be difficult. Regardless of the difficulty, everyone should strive to have at least a portion of savings to meet any fluctuations in income and spending—somewhere between three and 12 months of expenses.

Beyond that, cash idling in a savings account becomes wasteful because it loses purchasing power to inflation over time. Instead, cash not tied up in an emergency or spending account should be placed in something that will help it maintain its value or grow, such as investments.


Investing involves purchasing assets, usually stocks and bonds, to earn a return on the money invested. Investing aims to increase an individual’s wealth beyond the amount they invested. Investing does come with risks, as not all assets appreciate and can incur a loss.

Investing can be difficult for those unfamiliar with it. It helps to dedicate some time to gain an understanding through readings and studying. If you don’t have time, you might benefit from hiring a professional to help you invest your money.


Protection refers to the methods people take to protect themselves from unexpected events, such as illnesses or accidents, and as a means to preserve wealth. Protection includes life and health insurance and estate and retirement planning.

Personal Finance Services

Several financial planning services fall under one or more of the five areas. You’re likely to find many businesses that provide these services to clients to help them plan and manage their finances. These services include:

  • Wealth Management
  • Debt Management
  • Loans and Debt
  • Budgeting
  • Retirement
  • Taxes
  • Risk Management
  • Estate Planning
  • Investments
  • Insurance
  • Credit Cards
  • Home and Mortgage

Personal Finance Management Strategies

The sooner you start financial planning, the better, but it’s never too late to create financial goals to give yourself and your family financial security and freedom. Here are the best practices and tips for personal finance.

1. Know Your income

It’s all for nothing if you don’t know how much you bring home after taxes. So before deciding anything, ensure you know exactly how much take-home pay you receive.

2. Devise a Budget

A budget is essential to living within your means and saving enough to meet your long-term goals. The 50/30/20 budgeting method offers a great framework. It breaks down like this:

  • Fifty percent of your take-home pay or net income (after taxes) goes toward living essentials, such as rent, utilities, groceries, and transport.
  • Thirty percent is allocated to discretionary expenses, such as dining out and shopping for clothes. Giving to charity can go here as well.
  • Twenty percent goes toward the future—paying down debt and saving for retirement and emergencies.

It’s never been easier to manage money, thanks to a growing number of smartphone personal budgeting apps that put day-to-day finances in the palm of your hand. Here are just two examples:

  • My Pocket Debt Counsellor helps you track and adjust your spending to control every cent you spend. This app is handy as it also comes with all your debt counselling and debt review removal needs as well as your credit score. The app will even dish out custom tips, offers and advice.
  • 22 Seven cash flow, budgets, credit cards, bills, and investment tracking from one place. It automatically updates and categorizes your financial data as information comes in, so you always know where you stand financially.

3. Pay Yourself First

It’s important to “pay yourself first” to ensure money is set aside for unexpected expenses, such as medical bills, a significant car repair, day-to-day expenses if you get laid off, and more. The ideal safety net is three to 12 months of living expenses.

Financial experts generally recommend putting away 20% of each paycheck every month. Once you’ve filled up your emergency fund, don’t stop. Continue funneling the monthly 20% toward other financial goals, such as a retirement fund or a down payment on a home.

4. Limit and Reduce Debt

It sounds simple enough: Don’t spend more than you earn to keep debt from getting out of hand. But, of course, most people have to borrow from time to time, and sometimes going into debt can be advantageous—for example, if it leads to acquiring an asset. Taking out a bond to buy a house might be one such case. Still, leasing sometimes can be more economical than buying outright, whether renting a property, leasing a car, or even getting a subscription to computer software.

On the other hand, minimizing repayments (to interest only, for instance) can free up income to invest elsewhere or put into retirement savings while you’re young when your nest egg gets the maximum benefit from compounding interest.

5. Only Borrow What You Can Repay

Credit cards can be major debt traps, but it’s unrealistic not to own any in the contemporary world. Furthermore, they have applications beyond buying things. They are crucial to establishing your credit rating and a great way to track spending, which can be a considerable budgeting aid.

Credit needs to be managed correctly, meaning you should pay off your entire balance every month or keep your credit utilization ratio at a minimum (that is, keep your account balances below 30% of your total available credit).

Given the extraordinary reward and incentives offered these days (such as cashback), it makes sense to charge as many purchases as possible—if you can pay your bills in full.

Avoid maxing out credit cards at all costs, and always pay bills on time. One of the fastest ways to ruin your credit score is to constantly pay bills late or even worse, miss payments.

Using another debit card, which takes money directly from your main bank account, is another way to ensure that you will not be paying for accumulated small purchases over an extended period with interest.

6. Monitor Your Credit Score

Credit cards are the primary vehicle through which your credit score is built and maintained, so watching credit spending goes hand in hand with monitoring your credit score. If you ever want to obtain a lease, home loan, or any other type of financing, then you’ll need a solid credit report. There are a variety of credit scores available, but the most popular one is the Experian Score through the ClearScore mobile app.

Factors that determine your score include:

  • Payment history (35%)
  • Amounts owed (30%)
  • Length of credit history (15%)
  • Credit mix (10%)
  • New credit (10%)

ClearScore credit score ranges from 0 to 740. The score is divided into five bands, from poor to exceptional.

Credit scoreExperian bandClearScore name
0-599Very poorLet’s start climbing
599 – 615PoorOn the up
616 – 633FairOn good ground
634 – 657GoodLooking bright
658 – 740ExcellentSoaring high

The higher the score, the better your financial situation looks to potential lenders and the more likely you are to be approved for credit products, such as a loan, mortgage or credit card.

To pay bills, set up direct debiting where possible (so you never miss a payment) and subscribe to reporting agencies that provide regular credit score updates. In addition, you can detect and address mistakes or fraudulent activity by monitoring your credit report. Our law allows you to obtain free credit reports once a year.

Reports can be obtained directly from each credit bureau or agency.

7. Plan for Your Future

To protect the assets in your estate and ensure that your wishes are followed when you die, be sure you make a will and—depending on your needs—possibly set up one or more trusts. You also should look into insurance and find ways to reduce your premiums, if possible: vehicle, home, life, disability, and long-term care. Periodically review your policy to ensure it meets your family’s needs through life’s major milestones.

Other critical documents include a living will and a healthcare power of attorney. While not all of these documents directly affect you, all of them can save your next of kin considerable time and expense when you fall ill or become otherwise incapacitated.

Retirement may seem like a lifetime away, but it arrives much sooner than expected. Experts suggest that most people will need about 80% of their current salary in retirement. The younger you start, the more you benefit from what advisors call the magic of compounding interest—how small amounts grow over time.

Setting aside money now for your retirement not only allows it to grow over the long term but also can reduce your current income taxes if funds are placed in a tax-advantaged plan, such as a retirement account (RA).

While your children are young, take the time to teach them about the value of money and how to save, invest, and spend wisely.

If your employer offers retirement plan, start paying into it immediately, especially if your employer matches your contribution. By not doing so, you’re giving up free money. Take time to learn the difference between a Retirement Plan and a Provident Fund if your company offers both.

Investing is only one part of planning for retirement.

8. Get Insurance

As you age, it’s natural for you to accumulate many of the same things your parents did—a family, home or apartment, belongings, and health issues. Insurance can be expensive if you wait too long to get it. Health care, long-term care insurance, life insurance; it all increases in cost the older you get. Additionally, you never know what life will send your way. If you’re the sole breadwinner for the family, or you and your partner both work to make ends meet, a lot depends on your ability to work.

Insurance can cover most of the hospital bills as you age, leaving your hard-earned savings in your family’s hands; medical expenses are one of the leading reasons for debt. If something happens to you, life insurance can give those you leave behind a buffer zone to deal with the loss and get back on their feet financially.

9. Maximize Your Tax Breaks

Due to an overly complex tax code, many people leave hundreds or even thousands of rands sitting on the table every year. By maximizing your tax savings, you’ll free up money that can be invested in your reduction of past debts, enjoyment of the present, and plans for the future.

You should start saving receipts and tracking expenditures for all possible tax deductions and tax credits. Many office supply stores sell helpful “tax organizers” that have the main categories already labeled.

After you’re organized, you’ll want to focus on taking advantage of every tax deduction and credit available, as well as deciding between the two when necessary. In short, a tax deduction reduces the amount of income on which you are taxed, whereas a tax credit reduces the amount of tax that you owe. This means that a R1,000 tax credit will save you much more than a R1,000 deduction.

10. Give Yourself a Break

Budgeting and planning can seem full of deprivations. Make sure you reward yourself now and then. Whether it’s a vacation, a purchase, or an occasional night on the town, you need to enjoy the fruits of your labor. Doing so gives you a taste of the financial independence you’re working so hard for.

Last but not least, don’t forget to delegate when needed. Even though you might be competent enough to do your own taxes or manage a portfolio of individual stocks, it doesn’t mean you should. Setting up an account at a brokerage and spending a few hundred rands on an accountant or a financial planner—at least once—might be a good way to jump-start your planning.

Personal Finance Management Skills

The key to getting your finances on the right track is using skills you likely already have. It’s also about understanding that the principles that contribute to success in business and your career work just as well in personal money management. Three key skills are finance prioritization, assessing the costs and benefits, and restraining your spending.

  • Finance Prioritization: This means that you can look at your finances, discern what keeps the money flowing in, and make sure that you stay focused on those efforts.
  • Assessing the Costs and Benefits: This key skill keeps professionals from spreading themselves too thin. Ambitious individuals always have a list of ideas about other ways that they can hit it big, whether it is a side business or an investment idea. While there is a place and time for taking a flier, running your finances like a business means stepping back and honestly assessing the potential costs and benefits of any new venture.
  • Restraining Your Spending: This is the final big-picture skill of successful business management that must be applied to personal finances. Time and again, financial planners sit down with successful people who still manage to spend more than they make. Earning R250,000 a year won’t do you much good if you spend R275,000 annually. Learning to restrain spending on non-wealth-building assets until after you’ve met your monthly savings or debt reduction goals is crucial in building net worth.
Free Guide About Personal Finance Management In South Africa

Personal Finance Management Education

Personal money management isn’t one of the most popular topics in educational systems. Many college degrees require some financial education, but it isn’t geared toward individuals, which means that most of us will need to get our personal finance education from our parents (if we’re lucky) or learn it ourselves.

Fortunately, you don’t have to spend much money to find out how to manage it better. You can learn everything you need to know for free online and in library books. Almost all media publications regularly dole out personal finance advice, too.

Online Blogs

Reading personal finance blogs is a great way to start learning about personal finance. Instead of the general advice you’ll get in personal finance articles, you’ll learn exactly which challenges real people face and how they address them.

At the Library

You may need to visit your library in person to get a library card if you don’t already have one, but after that, you can check out personal finance audiobooks and e-books online without leaving home. Some of the following best sellers may be available from your local library: I Will Teach You to Be RichThe Millionaire Next Door, Your Money or Your Life, and Rich Dad Poor Dad. Personal finance classics such as Personal Finance for DummiesThe Total Money MakeoverThe Little Book of Common Sense Investing, and Think and Grow Rich are also available as audiobooks.

Free Online Classes

If you enjoy the structure of lessons and quizzes, try one of these free digital personal finance courses:

  • Morningstar Investing Classroom offers a place for beginning and experienced investors alike to learn about stocks, funds, bonds, and portfolios. Some of the courses you’ll find include “Stocks Versus Other Investments,” “Methods for Investing in Mutual Funds,” “Determining Your Asset Mix,” and “Introduction to Government Bonds.” Each course takes about 10 minutes and is followed by a quiz to help you make sure that you understood the lesson.
  • EdX is an online learning platform created by Harvard University and the Massachusetts Institute of Technology. It offers at least three courses that cover personal finance: ‘Personal Finance, Part 1: Investing in Yourself” from Wellesley College, “Personal Finance” from Purdue University, and “Finance for Everyone: Smart Tools for Decision-Making” from the University of Michigan. These courses will teach you how credit works, which types of insurance you might want to carry, how to maximize your retirement savings, how to read your credit report, and what the time value of money is.
  • “Planning for a Secure Retirement” is an online course from Purdue University. It’s broken up into 10 main modules, and each has four to six sub-modules on topics such as Social Security, 401(k) and 403(b) plans, and IRAs. You’ll learn about your risk tolerance, think about what kind of retirement lifestyle you want, and estimate your retirement expenses.


Personal finance podcasts are a great way to learn how to manage your money if you’re short on free time. While you’re getting ready in the morning, exercising, driving to work, running errands, or preparing for bed, you can listen to expert advice on becoming more financially secure.

The most important thing is to find resources that work for your learning style and that you find interesting and engaging. If one blog, book, course, or podcast is dull or difficult to understand, keep trying until you find something that clicks.

Education shouldn’t stop once you learn the basics. The economy changes, and new financial tools like the budgeting apps mentioned earlier are always being developed. Find resources you enjoy and trust, and keep refining your money skills through retirement and beyond.

What Personal Finance Management Classes Can’t Teach You

Personal finance education is a great idea for consumers, especially people starting out who want to learn investing basics or about credit management; however, understanding the basic concepts is not a guaranteed path to financial sense. Human nature can often derail the best intentions to achieve a perfect credit score or build a substantial retirement nest egg. These three key character traits can help you stay on track:


One of the most important tenets of personal finance is systematic saving. For example, say your net earnings are R600,000 per year, and your monthly living expenses—housing, food, transportation, and the like—amount to R32,200 per month.

There are choices to make surrounding your remaining amount in monthly salary. Ideally, the first step is to establish an emergency fund or perhaps a tax-advantaged savings account.

Establishing an emergency fund takes financial discipline—without it, giving in to the temptation to spend rather than save can have dire consequences. In the event of an emergency, you may not have the money to pay the expenses—leading you to finance them through debt.

Once you have your emergency stash, you’ll need to develop investing discipline—it’s not just for institutional money managers who make their living buying and selling stocks. Average retail investors tend to do better by setting an investment target and abiding by it rather than buying and selling stocks trying to time the market.

A Sense of Timing

Timing can be crucial. For instance, imagine you’re three years out of college, have established your emergency fund, and want to reward yourself. A Jet Ski costs R273,000, but you want to start investing also. “Investing in growth stocks can wait another year,” you say. “I have plenty of time to launch an investment portfolio.”

However, putting off investing for one year can have significant consequences. The opportunity cost of buying a personal watercraft can be illustrated through the time value of money.

The R273,000 used to buy the Jet Ski would have amounted to nearly R4,088,026.99 in 40 years at 7% interest, a reasonable average annual return for a growth mutual fund over the long haul. Thus, delaying the decision to invest wisely may likewise delay the ability to reach your goal of retiring at age 65.

Doing tomorrow what you could do today also extends to debt payment. If you were to put the Jet Ski on your credit card, the R273,000 credit card balance would take 60 – 84 months (5-7 years) to pay off if you only made minimum payments each month. And don’t forget the interest you’re paying: at an 23-25% annual percentage rate.

Emotional Detachment

Personal finance matters are business, and business should not be personal. A difficult but necessary facet of sound financial decision-making involves removing emotions from a transaction.

Making impulsive purchases feels good but can significantly impact long-term investment goals. So can making unwise loans to family members. Your cousin Fred, who has already burned your brother and sister, will likely not pay you back, either. The smart thing to do is decline his requests for help—you’re trying to make ends meet also.

The key to prudent personal financial management is to separate feelings from reason. However, when loved ones are experiencing real trouble, it pays to help if you can—just try not to take it out of your investments and retirement.

Breaking Personal Finance Management Rules

The personal finance realm may have more guidelines and tips to follow than any other. Although these rules are good to know, everyone has their own circumstances. Here are some rules prudent people, especially young adults, are never supposed to break—but can break if necessary.

Saving or Investing a Set Portion of Your Income

An ideal budget includes saving a portion of your paycheck every month for retirement—usually around 10% to 20%. However, while being fiscally responsible is important and thinking about your future is crucial, the general rule of saving a given amount for retirement may not always be the best choice, especially for young people just getting started.

For one thing, many young adults and students need to consider paying for their biggest expenses, such as a new car, home, or postsecondary education. Taking away 10% to 20% of available funds would be a definite setback in making those purchases.

Additionally, saving for retirement doesn’t make much sense if you have credit cards or interest-bearing loans to pay off. The 19% interest rate on your Visa card probably would negate the returns you get from your balanced mutual fund retirement portfolio five times over.

Finally, saving money to travel and experience new places and cultures can be especially rewarding for a young person who’s still unsure about their life path.

Long-term Investing/Investing in Riskier Assets

The rule of thumb for young investors is that they should have a long-term outlook and stick to a buy-and-hold philosophy. This rule is one of the easier ones to justify breaking. Adapting to changing markets can be the difference between making money or limiting your losses and sitting idly by and watching your hard-earned savings shrink. Short-term investing has its advantages at any age.

Common investing logic suggests that because young investors have such a long investment time horizon, they should be investing in higher-risk ventures; after all, they have the rest of their lives to recover from any losses that they may suffer; however, you don’t have to take on undue risk in your short- to medium-term investments if you don’t want to.

The idea of diversification is an important part of creating a strong investment portfolio; this includes both the riskiness of individual stocks and their intended investment horizon.

At the other end of the age spectrum, investors near and at retirement are encouraged to cut back to the safest investments—even though these may yield less than inflation—to preserve capital. Taking fewer risks is important as the number of years you have to earn money and recover from bad financial times dwindles, but at age 60 or 65, you could have 20, 30, or even more years to go. Some growth investments could still make sense for you.

Frequently Asked Questions

What Is Personal Finance in South Africa?

Personal finance is the knowledge, instruments, and techniques used to manage your finances. When you understand the principles and concepts behind personal finance, you can manage debt, savings, living expenses, and retirement savings.

What Are the 5 Main Components of Personal Finance Management?

The five main components are income, spending, savings, investing, and protection.

Why Is Personal Finance So Important for South Africans?

The concepts behind managing your personal finances can guide you in making intelligent financial decisions. In addition, the decisions you make throughout your life on what to buy, sell, hold, or own can affect how you live when you can no longer work.

Where can I study financial management in South Africa?

South Africa offers various options for studying financial management. Universities and colleges offer degrees, diplomas, and short courses. Explore the websites of institutions like University of Cape Town, Wits University, or the Chartered Institute of Investment and Securities (CISI) for South African qualifications.

What do you mean by personal finance management?

Personal finance management (PFM) is about taking control of your money in South Africa. It involves budgeting, saving, managing debt, investing wisely, and planning for your future financial security.

What are the 5 basics of personal finance?

Budgeting: Track your income and expenses to see where your money goes.
Saving: Build an emergency fund and save towards financial goals.
Debt Management: Pay off debt strategically to avoid high-interest charges.
Investing: Grow your wealth for long-term goals through smart investments.
Financial Planning: Plan for retirement, healthcare, and unexpected events.

How do I start managing personal finance?

Track your spending: Use a budgeting app or spreadsheet to understand your habits.
Set financial goals: Identify what you’re saving for (short- and long-term).
Create a budget: Allocate your income towards needs, wants, and savings.
Explore debt repayment strategies: Prioritize high-interest debt.
Educate yourself: Learn about financial products and investment options.

What are the skills of personal finance management?

Goal setting: Define clear financial objectives.
Budgeting: Effectively manage your income and expenses.
Financial literacy: Understand financial products and services.
Debt management: Develop strategies to pay off debt effectively.
Investment knowledge: Make informed investment decisions based on your risk tolerance.
Decision-making: Choose financial products and services that align with your goals.


Congratulations! By reaching this point, you’ve armed yourself with a wealth of knowledge on personal finance management (PFM) in South Africa. Remember, PFM is your key to unlocking financial freedom and building a secure future.

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