According to data from Stats SA, the annual consumer price inflation (CPI) increased from 5.8% in April to 6.5% in May.
Additionally, last week Wednesday’s R2.30 increase on all fuel variants was announced. With continuously increasing fuel and food prices, many South Africans feel suffocated by the cost of living.
For 25-year-old Andiswa May, these current economic times have been tough. As a new car owner, she has had to make sense of the fuel hikes and regularly adjust her budget. Though she is fortunate to work from home, she still feels the pinch when having to drive to other places.
“I am currently visiting home in the Eastern Cape and my half tank costs me around R500. Just the half tank! Most of my finances have been redirected towards fuel consumption now,” she said.
As someone who strives towards financial wellness and excellence, the current state of the economy has unfortunately affected some of her financial goals, including her savings.
“I believe you cannot save what you do not have. So I haven’t necessarily been saving as much as I used to but now I am cutting costs where I can and rerouting my finances to where I am affected most.”
May also mentioned that while it is an inconvenience not to save as much as she had intended, she is also aware that having even a little to save is a privilege many young South Africans don’t have.
When asked if she still feels like she has a grip over her finances despite the current and continuous food and fuel increases, May responded with both yes and no. “I can only save for so many rainy days and restructure my budget so many times before the rising cost of living outweighs my stagnant income earning.
Last week I opened a spreadsheet to physically plan my budget for July and see if I will feel I have better control and security going forward. Only time will tell. But I'm positive and hopeful yet resigned at the same time,” she said.
While these economic times are indeed tough and unkind to the pockets of both young and old, personal finance coach Miranda Dlamini advised that the first rule is not to panic.
“Unfortunately, the rough economic times are felt throughout the world. Instead of panicking, I think the most important thing is to make sense of your own finances. Be honest about your finances, how they’re looking and how you can better deal with things,” she said.
Dlamini believes that focusing on your own personal finances places you in a better position, making you more aware of any changes and steps that need to be taken to avoid mishaps.
“I always like to talk about a budget because I believe that’s the main important point that can help people figure out whether they have a spending problem or an income problem. If you have a spending problem, that’s kind of easier because you will find that certain things align as you cut back on your spending.”
Dlamini urged consumers to continuously assess their big expenditures to check if they are still getting their money’s worth and if certain changes can be made to save.
“For example, the big costs for most people would be medical aid, their home, car and insurance. Can you find a service provider that can offer cheaper car insurance? Look at the medical aid that you have. Can you cut back on some benefits or change your medical aid plan? When assessing and reviewing all of those things, you may find that you save quite a bit of money.”
Consumers should also settle as much high-interest debt as they are able to, said Dlamini. This is as interest rates increase and debt is anticipated to get more expensive.
When asked if it is realistic to still want to rigidly stick to all the personal financial goals made at the beginning of the year, Dlamini suggested reviewing the goals and checking if they are smart (specific, measurable, achievable, relevant and time bound).
She also emphasised the importance of looking into one’s own lifestyle. “It is all dependent on you as an individual. Has your income been affected by what is going on? How comfortable do you feel about your income in the near and distant future? The best thing is to evaluate your goals and adjust accordingly where necessary,” she advised.
Finally, as many people look into ways of establishing multiple income streams, Dlamini advised that side hustles can be beneficial to one’s personal finances and that there are plenty of opportunities, especially in the online world. What is required, however, is the willingness to make the necessary sacrifices.
“People can look into online tutoring, getting paid to complete online surveys and offering virtual assistance. But with every side hustle, whether online or not, you will need to sacrifice something, whether it’s your time or something else to make it work.”
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