Ina Opperman

By Ina Opperman

Business Journalist

After Godongwana’s budget speech, create a financial plan for yourself

Many consumers felt a bit of sympathy for the finance minister delivering Budget 2024 as they also struggle with their budgets.

After the budget speech, it is time for consumers to look in the mirror and set a budget for themselves. Finance Minister Enoch Godongwana continues to walk a tricky tightrope, determinedly working to decrease government borrowing, while aiming to bridge the gap between revenue and expenses.

For many South Africans, this narrative is all too familiar, Farzana Botha, segment solutions manager at Sanlam Risk and Savings, says. She encourages consumers to see the budget speech as an opportunity to have frank finance conversations with themselves and commit to moving closer to their financial goals.

“2023 was a challenging year economically, with estimated real gross domestic product (GDP) growth of just 0.6%, the highest levels of load shedding on record, weak commodity prices, infrastructure issues and high levels of fiscal deficit.”

Botha says South Africans felt the pressure, with high inflation and the increased cost of living causing financial stress. “This year, despite no increase in tax rates and the fuel levy, no inflationary relief was proposed for taxpayers, which means we will all continue to feel that pinch in our pockets.”

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Personal budget speech

Therefore, she says, now is the time for people to budget speech themselves and find smart ways to make their money work harder. Botha has these tips for your personal budget speech:

  • Small step-changes add up: Celebrate the small wins and habits moving your financial future forward. The minister had to make many difficult trade-offs, but we are also seeing positive steps, such as inflation stabilising. Double down on your positive money habits as incremental movements in the right direction all add up.
  • Maximise every opportunity: Much of the minister’s conversation centred on taxes, including not adjusting personal income tax brackets, rebates and medical tax credits for inflation and explaining how taxes are used to benefit the nation. Consider how you leveraged your tax deductions and annual returns. Did you maximise these opportunities to create more disposable income through investments, for example? Are you making the most of annual allowances for tax-free savings accounts and retirement fund contributions or can you do more this year?
  • Talking two-pot: The adoption of the Revenue Laws Amendment Bill by the national assembly of parliament marks a major step towards the implementation of the two-pot retirement system. From 1 September 2024, you may be able to access a portion of your retirement savings from the ‘savings component’. While this may provide some short-term relief, it is important to understand the consequences for your future self. Consider speaking to a financial adviser to unpack the long-term impact of accessing your retirement savings early.
  • Have the professionals in your corner: Minister Godongwana does not compile the budget alone – he has a team on his side. Assemble your own ‘support team’ of experts to help revise your roadmap to reach your goals, with any necessary adjustments post-budget.
  • Take responsibility: Debt and addressing unnecessary expenditure was a dominant theme in the Budget speech which is a pertinent topic for many people personally. DebtBusters recently revealed that the average South African consumer spends about 62% of their paycheque servicing their debt. If you struggle with debt, having a plan is important. Consider accessing Sanlam’s free credit coaches to help you pay down debt, instil positive habits and improve your credit score.
  • Be honest with yourself and others: Be the finance minister of your own life. When you budget speech yourself, be honest and get granular. The only way this exercise will make a meaningful difference is if you are completely transparent. Reflect on the behaviours that serve you and plan to let go of those that are not. Revise your budget, prioritise spending and be accountable to others. Having honest conversations with loved ones can be incredibly empowering. If you share your financial reality, they can help you self-reflect, plan for the future, and keep you on track.
  • Walk the journey: Minister Godongwana ended by sharing that it is easy to get swept up in extremes. He urged the nation to avoid blind optimism or crippling pessimism – rather focus on the journey to shared prosperity. These words ring true for individuals as well. There will be chapters of highs and swings of lows but it is important to stay focused and have the confidence to stay the course during tough times. Keep your eye on the measures you can control and celebrate every small win.

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Expenses exceeding income

“We have seen several successive years of salaries not keeping up with inflation, which has impacted people’s take-home pay. Coming out of a period of substantial interest rate and inflation hikes, into a new cycle of interest rate stabilisation and potential cuts, there should be some relief for South Africans.”

However, she says, we are still in a tough economic environment and therefore, we must be smart with our money. “Living with financial confidence comes from having a plan, adjusting it when necessary and sticking to it as closely as possible.”

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