Tough times for consumers
PEOPLE are urged to curb excessive spending as the cost of living continues to rise. Last month, motorists in South Africa were left shocked as the petrol price reached a record high of more than R16 a litre and the increase is expected to trickle into the cost of goods and services such as food and transport. Thami Cele from Absa says, “Life is full of unexpected surprises and expenses, so it is always a good idea to have some money stashed away to fall back on if and when you need it. More than just a money lesson, that is a life lesson that I have learnt over and over.” Financial advisor, Rene Maritz, gives you tips on how you can stretch your money.
WHERE THE INCREASE COMES FROM
Disposable income has come under significant pressure due to the substantial rise in fuel prices and an unstable rand. Therefore, it’s critical for consumers to be a lot more responsible about their finances.
¦ Motorists Rene says motorists who are able to buy cars with low carbon footprints will be cushioned significantly, compared to those who travel and are stuck daily in traffic without the stop-start technology in their cars. This technology senses when the car is not moving and shuts down the engine, reducing fuel consumption and emissions.
¦ Consumer goods Another fuel price increase will push freight costs up, which will likely be passed on to the consumers by the businesses. “Consumers may feel the increasing impact of the additional transport costs along the supply chain that produces most goods,” says Rene.
¦ Public transport commuters Because South Africa doesn’t have a single transport economic regulator, private public transport operators set their own prices. The prices are determined by their service delivery costs and fuel increases.
TIGHTENING THE BELT
Thami adds a few ways you can use to tighten your belt and survive the current price increases in the country:
¦ Travel smart – If you have a car, avoid travelling during peak hours to save petrol. Starting a lift club with your friends or colleagues will also save you money. Public transport services such as buses and trains often have substantial discounts when people buy monthly tickets.
¦ Downsize – Home loans and car repayments are usually the second-largest debt. If you are on the edge of financial trouble, downsizing may just the right thing to do. Sell or trade-in your vehicle for a smaller, petrol efficient and less expensive model to remove some pressure from your budget.
¦ Budget – Write down a budget and stick to it. You can also download a template from the internet. Jotting down exactly what you spend your money on will help you see where you waste money. If you stick to the budget, the money you are saving can be put to better use – like going towards your savings.
¦ Cut back on luxuries – It’s very important to know the difference between ‘needs’ and ‘wants’. Cut down on luxuries such as movie dates, eating out at expensive restaurants and paying for magazine and television channels subscriptions. You could also look into renegotiating your short-term insurance for a lower monthly premium. Use the money you save to pay off debt.