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BECOMING CASH SAVVY AMONG THE RISING COST OF LIVING

Updated: Feb 26


Over the past few months, South Africans have been hit by sharp price increases that have had a dramatic effect on their quality of life.

It has become increasingly more expensive to afford even the basics, such as bread and milk, water and electricity, and to use public or private transportation. While these rising costs affect everyone, low-income households feel them the most. Today we chaat about managing your money better

The hike in the cost of living in this country will have detrimental effects on many families who are already too stretched passed their means. It is difficult to share excitement over the recent minimum wage increases because it holds no ground against the price hikes. The increases in food prices, fuel, and unexpected expenses were recently named the top three threats to South Africans maintaining a budget and ultimately saving money. We take a look at becoming cash savvy among the rising cost of living in SA.


coin on note

CAN SOUTH AFRICANS AFFORD TO SURVIVE?

In just one month, the price of a whole chicken from Woolworths has risen by more than 10%, from R49.99 to R54.99 a kilogram. This inflated price tag is just one example of how the income of otherwise well-off consumers will no longer go as far as it used to. With the middle-class needing to cut back even further, it leaves one wondering what will happen to the lower-income class who may not be able to afford even a loaf of bread or milk these days.


The Mail & Guardian spoke to analysts about what is in store for South African consumers as high fuel and food prices continue to squeeze their incomes. Their resounding message: batten down the hatches because it will be a punishing year on your finances.

The latest Consumer Price Index for April 2022 published by Stats SA shows there has been little respite for hard-pressed South Africans. Food inflation was recorded at 6.2%. The most basic foodstuffs cost more than a year ago, with staples like cooking oil recording the highest increases. (excerpt Moneyweb)


The fuel price, which affects almost everything else, has risen by a third in the 12 months to March 2022. Can you believe how much a litre of petrol is these days? Who would have thought we would be paying more than R25 per litre.

“Moreover, fuel price inflation of 29.4% is much higher than general inflation. Employees are struggling to make ends meet as they simply lose more buying power every month. Even after increases, salaries just cannot keep up with inflation, and you have to buy less and less, even if you are earning a little more.” Theuns du Buisson, an economics researcher at the Solidarity Research Institute (SRI).

“Virtually all the major price increases in the latest CPI release occur among the regulated administrative prices, which rose by a shocking 16,7% over against general inflation of 5,7%. “At the moment, consumers are facing the perfect storm that is having an extremely negative impact on their budgets.”

Then there is the rising cost of basic services and amenities like water and electricity. It’s worrying how many South Africans cannot afford to keep the lights on, let alone afford to warm up their homes on these icy cold days.


South Africans have been warned to be cautious and not live beyond their means by finding ways to spend less. Let’s take a look at some savvy money-saving swaps to make your income go further.

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Source: Business Tech Africa


SAVVY MONEY-SAVING TIPS

  • Take a packed lunch for work instead of ordering food and takeaways. One meal at an inexpensive restaurant can cost around R120, whereas five homemade chicken sandwiches would cost about the same. A little can go a long way if you take the time to prepare your own meals and lunches instead of paying more for the convenience of ordering meals.

  • Swap your store-bought cappuccino for a homemade brew that can be taken to work in a thermal travel mug. The price of a takeaway cappuccino from a popular franchise can cost upwards of R40, whereas a jar of coffee costs R100 and makes up to 30 cups or more. If cappuccino is a must, then most easy sachets cost around R10 per cup.

  • Cancel your gym membership and join a running group, exercise at home, or join a social sports club.

  • End the expensive debt such as clothing accounts by trying to pay them off. For many items, you can shop demo or second-hand listings which are as good as new. Look for local community markets or online - just remember to stay safe and always stay alert to any possible scams.

  • Switch from impulse purchases to planned purchases that stay within your budget. Keep an eye on weekly grocery specials or discounts and switch to brands or retailers offering better deals on daily necessities. Ensure you have a shopping list and stick to it. Impulse purchases will quickly eat away your cash. Always shop smart, and don’t be afraid to purchase store-branded items. Most shops place their most expensive items within eye level, so look further down the shelves. You can pick up the same product for cheaper because it has a different label.

man in food isle

Source: SABC News

  • Swap your current travel habits for more efficient ones such as walking, using public transport, or carpooling. Plan your daily travel carefully to avoid making regular or unnecessary car trips and opt for alternative transport to reduce spending on petrol. If you are going to drive, then drive with caution, avoiding peak traffic times and without harsh braking and sudden acceleration. Just altering your driving behavior can help you save on fuel.

  • If you drive fewer kilometers than you used to because of working from home, find out if you are eligible for lower premiums on your insurance.

  • Use loyalty programs offered by fuel stations and earn points for every litre of fuel you purchase.

  • Avoid drawing cash unnecessarily and use your bank statements to help determine your spending habits.

  • Choose energy-efficient or gas heaters in the winter and purchase your electricity in bulk once a month if you have a prepaid meter.

  • Use Wi-Fi wherever possible from a secure and legitimate source.

  • Replace casual, gut-feel financial planning with a more detailed, systematic approach. By keeping track of where your money goes every month, you can identify where saving opportunities exist and decide beforehand what you want to do with that extra cash. If surplus income isn’t available, then proper financial planning will help you identify your spending habits and encourage you to try to stretch your income across necessities only. You can speak to Wallstreet Financial Services for the assistance of a professional financial advisor.

  • Do not take out more debt to solve your current debt; it’s a never-ending cycle that entraps you and your financial position.

  • Consumers’ ability to keep up with the rising cost of living expenses is dependent on their ability to create an achievable budget and stick to it. That means paying off expensive debt first, stretching your disposable income across necessities only, and saving regularly for any unexpected expenses where possible. Draft a budget of your income and expenses and analyze your financial habits to identify the avenues available for change.

  • Don’t be afraid to coupon shop. If a retailer is having a promotion and you can use a voucher code, then take to shopping there. Pick N Pay online, for instance, offers various coupon codes based on your expenditure. For example, they sometimes offer R150 off when shopping for R1000 or more. Keep an eye out for those deals and try to shop for specials where possible. Finally, join rewards programs like EBucks, or Clicks Clubcard, for instance. Several retailers offer rewards when you shop, offering vouchers when you reach specified thresholds.

  • Look for wellness rewards programs that reward you for your healthy habits, such as Vitality and Momentum: Below are two wellness programs we encourage and support:

    • Discovery Vitality program: Vitality integrates and provides you with discounts at various retailers, and you accumulate points to reach different statuses. Another benefit is getting discounts on your insurance products and enhancements on your investments, including retirement-planning products.

    • Momentum Multiply program: Multiply integrates similarly, providing you with statuses and discounts at various outlets and retailers as well. You will also receive discounts for your interactive participation on your insurance products, as well as enhancements on your retirement products.

A PUSH IN THE RIGHT DIRECTION WITH A FINANCIAL ADVISOR


Examining your finances now and putting some realistic goals in place will help you prepare for all the tariff hikes and inevitable financial challenges. The best way to achieve a financially secure future is to have a financial advisor in your corner to help you review the year.


Create a brighter, more prosperous future when you plan your finances properly. If you need assistance with financial planning and a realistic approach that works for you, then contact Wallstreet Financial Services.

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