If you’re earning a salary in South Africa, you’ve probably heard a lot about “real” and “nominal” wages. Here’s a simple way to think about it, within the current South African context .

Nominal take-home pay is what you actually get now.

This is the money your employer hands you every month, before you do anything with it. A recent survey shows that the average nominal salary of R21 510 rose by 0,9% over the past year.

Real take-home pay is what that money can actually buy.

Real pay adjusts for inflation. If prices go up, your real pay will be smaller even if your nominal pay is higher. So if inflation is @ 3% and your nominal salary only increase by, say, 1% then you are effectively 3% poorer.

What’s happening in South Africa right now

Many households have seen only small increases in their nominal salaries. You get an increase based on the prevailing inflation rate of CPI. 

It is then taxed according to the progressive scales meaning the more you earn they more you pay. The net amount is your nominal take home pay.

But prices for everyday things—like food, transport, and fuel—are rising faster. When inflation is higher than your pay increase, your real take-home pay goes down.

The practical effect: even with a bigger pay cheque on paper, your ability to buy the same things you buy today is reduced. You might need to cut back on non-essentials or stretch money further to cover basics.

Real should be more than nominal in order to improve your standard of living. 

Why this matters for households

Your budget changes**: If your rent, electricity, or fuel costs rise faster than your salary, you’ll feel poorer in real life.

Savings are harder**: When more money goes to essentials, there’s less left to save for emergencies or big goals.

Debt can creep up**: If prices rise while income grows slowly, people sometimes rely more on credit, which can become a trap if rates rise.

So, what should you watch for?

Look at the difference between your take-home pay (nominal) and the cost of living (inflation). If your pay hasn’t kept pace with inflation, your real income is shrinking.

Keep an eye on fuel, groceries, and other essentials. They often move with inflation and affect real purchasing power more than salary bumps.

If you’re able, plan ahead: trim non-essentials, compare prices, and consider small ways to save (bulk buying, cheaper brands, transport planning).