With all the twists, shifts and turns the economy has taken this year, it certainly hasn’t been easy-going for cash-strapped South Africans. Now that we’ve kissed the winter blues goodbye, it’s time to welcome the warmer season with open arms and there’s no better way to do it than with a spring clean… of your finances! It’s time to clear some of that debt, start a brand new budget and go into the new season with a fresh start.
While it sounds easy in theory, in practice there are often unexpected curveballs that can throw even the most prudent of budgeters off the straight and narrow.
“Changes in both the economy and your personal life affect your budget, which is why it should be revisited on a regular basis,” says Budget Insurance’s Susan Steward.
In September, petrol prices are expected to rise by 59 cents a litre and diesel by 56 cents a litre. Electricity tariffs are expected to increase by more than 20%. And as August stats indicate, South African consumers remain under tremendous pressure to clear debt.
Preliminary statistics from Stats SA reveal that there have been 48 169 civil summonses issued for debt in June, valued at more than R350 million.
Steward shares a few guidelines on how to balance our budgets between September’s petrol hikes and increasing consumer debt and living costs (see below).
In her opinion, there are nine things to consider ahead of your budget spring clean, especially if your mid-year salary increase has you tempted by a splurge.
1.First things first: getting rid of debt.
All your winter shopping splurges on credit may have accumulated, so it’s time to sit with the statements and pay off outstanding debt or strategise a smart budget plan to make the necessary payments.
2. Cut costs (the right costs)
Life insurance is one of things you don’t want to cut, says Steward.
“The question isn’t whether you can afford to be insured, it’s can you afford not to be,” she says. Weighing your insurance options according to your needs and speaking to the right people, saves you money and saves your stresses.
3. Less is more, let go of excess
If expensive collectables is a hobby, try reprioritising your needs and wants list to avoid having to pay for wants and sacrificing family healthcare and education in the long-run.
4. Remember your saving goals
If you didn’t stick to your New Year’s resolution to save more money this year, it’s not too late to start now. Make a plan to set up a monthly debit order to an investment account or open a tax-free savings account, increase your pension fund contribution and maybe request the 13th cheque option from your employer.
5. Cover for a rainy day
The amount you save towards an emergency fund depends on your personal circumstances. Ideally an emergency fund should cover three to six months’ living expenses. Start by just putting aside R250 a week, for example, you can accumulate at least R1 000 in a month.
6. Track your spending
Try establish where unnecessary spending goes and how you can reduce it by making small changes to save big. Keep track of expenses in your statements and find a pattern to re-strategise saving methods.
7. Outdated fees must be phased out
You could be paying subscription fees for magazines you don’t read, a gym you don’t go to or paying for a bank account you no longer use. End subscriptions and use the money in more efficient places.
8. Payments that don’t reap rewards
Always read the fine print or terms and conditions when it comes to gaining loyalty points from reward programmes. Falling for a quick programme can have you overspending for smaller returns. Sometimes it’s just not worth it.
9. Know the money lingo
Research, read and seek advice on the best methods to save your money and make it go further for longer. Understanding investments, pension funds and the best account to save and spend your rand can certainly take you a long way.
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