Running out of money? Here are tips to cut your living costs

South Africans are struggling financially, facing many expenses with limited funds.

The price of food baskets continues to rise, electricity costs are at an all-time high, and housing prices are no longer what they used to be. Although there has been some relief from the reduction in the repo rate, South Africans are still struggling to make ends meet.

According to Joe Szemerei, COO at Indwe Risk Services, the rising cost of living is seeing people scale back wherever possible. They are setting budgets to manage expenses, starting side hustles, and eliminating non-essential items from their lives.

How money is spent

Szemerei references the PwC Voice of the Consumer Survey released in June 2024 that many South Africans expect the biggest increase in their consumer spending to be on groceries.

While 75% of consumers believe inflation is the number one risk that could affect the country over the next year, followed by macroeconomic volatility (55%) and social inequality (40%).

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Money saving habits

He adds that saving can be difficult but some expenses can be reduced significantly through applying simple smart habits.  

The first one is the transport cost. Even though petrol prices have been decreasing, they are still higher than they were in 2023.

“To save in this area, you can try to reduce your mileage by carpooling or ridesharing where you can.”

He recommends that drivers consider insurance companies that lower premiums for those who drive less. “Keep your car serviced and maintained to ensure it is running at its most efficient.”

Avoid spending on groceries

Szemerei says to avoid overspending on groceries, it is important to draw up a weekly food menu and buy your groceries accordingly. This also helps you avoid impulse purchases.

“Be sure to take advantage of special offers or loyalty savings, and to stock up on non-perishables. It might also be worth your while to assess your food choices as some foods are far more expensive than others.”

Solar to save on electricity

Although Eskom has suspended load shedding, it has increased electricity tariffs by between 12.72% and 12.74% which saw the average increase to urban tariffs at 13.29% due to the increase in the affordability subsidy charge.

To save on this, he advises that consumers research to see if solar is a viable option. Another option is to try to switch to energy-efficient appliances and lightbulbs, turn off unnecessary lights and consider switching to gas for your cooking needs.

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Homeowners downscaling

Szemerei says that many homeowners have been forced to downscale due to high rent or repayment on their bonds.

“While this may seem like the best option for many, it is important to take into consideration that smaller properties in complexes and the like often come with levies and hidden costs that could soon see you out of pocket, too.”

He advises that, if one has extra space, they can rent out a room or cottage for additional income.

Insurance and medical aid expenses

He says it is incredibly dangerous for people to cancel their insurance and medical aid expenses during difficult financial situations. People often cancel them to help ease their financial load.

To avoid doing this, he lists different ways in which one can reduce their premiums:

• Get quotes on your homeowner insurance and compare that to what you are currently paying through your bank or bondholder. Switch your insurer if need be.

• Insure all your assets with one insurer to simplify the process and enjoy a potential discount.

• Relook your excess options and increase your excess payable to lower your monthly premium.

• Making annual or biannual payments often results in a discount through your insurance company.

• Reconsider the efficacy of policies. Are they still relevant and will they achieve the intended outcome should something happen?

• Relook your insurance covers to ensure that all the potentially catastrophic exposures are covered first and properly. Then look at the items which are less crucial from a financial viability point of view and potentially remove those from your cover.

 “It is just as crucial to make room for savings during hard times. It is possible to achieve your financial goals and live a good life.”

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