South Africa’s cost- of- living crisis.

South Africa is amid a cost-of-living crisis. With inflation reaching its highest level in 13 years, South Africans have seen a surge in the cost of food, fuel and household utilities as well as an increase to home loan payments and other monthly debt payments. The latest food basket data from the Pietermaritzburg Economic Justice and Dignity group (PMBEJD) shows that some pantry essentials, fruits and eggs are still showing double-digit hikes.

According to the PMBEJD, its household food basket for March 2024 increased to R 5,277.93 – an increase of R 311.72 (6.3%) compared to March 2023. There is an urgency to becoming financially prudent to survive these tough times and looking for opportunities to save or reduce debt could prove to be beneficial.

Tips for reducing expenses.

1.  Consolidate your expenses

Analyse your monthly expenses and determine whether you are paying duplicate fees for e.g. If you have two bank accounts, you are probably paying bank fees on both accounts. Check how many streaming service subscriptions you currently have and consider cancelling one or more of these.

2.  Clear Debt

There are two approaches to clearing your debt that could be beneficial.

• The Snowball approach: this involves paying off your smaller debts first. As you start paying these off you feel motivated to see all this debt reduced and continue to stay on track.
• The Avalanche approach: with this approach, you pay off the debts with the highest interest rate first. This will free up cash monthly that could be used for other expenses.

Consult with a professional financial adviser to ensure you follow the best approach for your individual situation.

3.  Compartmentalise your savings

Savings provide financial independence and assist with unplanned financial emergencies. Saving for most households is difficult and every avenue for reducing costs should be explored. This entails keeping an eye out for opportunities to save such as:

• Reducing grocery costs by buying a cheaper supermarket brand.
• Buying refills for household detergents.
• Planning meals and eating at home instead of buying takeout.
• Browsing newspapers, social media and the internet for sales and discounts.
• Making use of rewards and loyalty programmes.
• Buying staple items in bulk.
• Using a shopping list to avoid buying duplicate products/items.

It is a good idea to use a spreadsheet or a budget app to track savings goals. In this way, you can measure progress.

Melessia Naidoo

Fund Accountant

References

1. Cost-of-living crisis: Experts share 3 survival tips (msn.com)

https://www.msn.com/en-us/money/personalfinance/cost-of-living-crisis-experts-share-3-survival-tips/ar-bb1jnckw

2. https://pmbejd.org.za/wp-content/uploads/2024/03/PMBEJD_Key-Data_March-2024_27032024.pdf