Debt, denial, and no plan: Why earning more doesn't mean you're financially secure
A new report has found that many high-income earners (classified as those earning above R15,000 per month) are drowning in debt and skipping financial advice, thanks to poor planning, low financial literacy, and the stigma of asking for help.
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702's Gugs Mhlungu spoke to resident certified financial advisor, Paul Roelofse.
Listen to their conversation in the audio clip below.
It's often assumed that high-income earners have it all together when it comes to financial planning.
Well, a new report suggests otherwise.
Momentum’s Financial Advice Research Report, in partnership with the Bureau of Market Research (BMR), which surveyed over 1600 households, revealed that many high-income earners are financially unstable, weighed down by debt, and not seeking the financial guidance they need.
Many correspondents had no long-term financial plan, with little or no provision for emergencies, retirement, or life-changing events.
The report found that only 39% of households earning more than R40,000 per month make use of a professional financial advisor, while nearly 70% of households that do use a professional advisor earn more than R15,000 per month.
High-income earners are classified as those earning above R15,000 per month.
Roelofse says many people in this group live beyond their means, relying on debt to maintain a lifestyle their income can't sustainably support.
He adds that there is also alarmingly low financial literacy among high-income earners.
Stigma, according to the report, is one of the key reasons why people don't seek help due to shame or a reluctance to face the reality of their finances.
"When we start with the financial plan, we look at your balance sheet, and we look at what you own and what you owe, and that's a great reality check in terms of where you're heading with your wealth. I suppose when you get to that point, you don't really want to see the truth. It's going to put you in a position where you've got to face a change in your lifestyle."
- Paul Roelofse, certified financial advisor
Roelofse emphasises that real financial freedom requires facing your reality, reducing debt and building a plan that looks beyond your next paycheque.
He advises that you seek a trusted and qualified financial advisor for long-term financial stability, not someone who just wants to sell you a product.
"No matter where you are in the salary scales or the wealth spectrum, you're still going to need to cater for life-changing events."
- Paul Roelofse, certified financial advisor
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