Need extra money? Here’s how to reduce your living costs for the rest of the year

Despite lower inflation, interest rates and fuel prices, South African consumers are still battling to survive and afford their basic expenses. However, with careful planning you can make adjustments to your lifestyle to ensure you can balance your budget.

Joe Szemerei, chief operations officer at financial services company Indwe Risk Services, says we are all feeling the pinch in our pockets as food, electricity and housing prices soar and interest rates remain high.

“While there has been some reprieve, many South Africans are struggling daily just to make ends meet. When making it to the end of the month feels near impossible, savings are the last thing on our minds.

“The rising cost of living is seeing people scale back wherever they can, setting budgets to manage expenses, starting side hustles and going without anything that is not a bare essential. This means that we are all looking where we can save and what we can do to make the situation more manageable.”

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South Africans expect higher living costs

According to a PwC Voice of the Consumer Survey 2024, 77% of South African consumers 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%).

Saving can be difficult but Szemerei says there are certain expenses that you can significantly reduce by implementing a few smart habits, such as:

• Transport: Petrol and transport costs add up quickly and although prices are currently decreasing, prices are still higher than they were in 2023. To save on transport, you can try to reduce your mileage by carpooling or ridesharing where you can. Some insurers also reduce your premiums if you drive less – check with your insurer. Keep your car serviced and maintained to ensure it is running at its most efficient.
• Groceries: The cost of the total household basket increased by 11% over the past 18 months. Many food basket items have seen year-on-year price increases, putting even basic foods out of reach for many consumers. To avoid overspending on groceries, draw up a weekly food menu and buy your groceries accordingly. This also helps you to avoid impulse purchases. Take advantage of special offers or loyalty savings 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.

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Electricity and a place to stay also pushing up living costs

• Electricity: In July this year, Eskom’s electricity tariffs increased 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. While South Africa has been enjoying far less load shedding this year, consumers have been hit hard with these increases adding yet another burden to their already overstrained pockets. To save some money on the electricity front, do some research to see if solar is a viable option for you. Otherwise, you can try to switch to energy-efficient appliances and lightbulbs, turn off unnecessary lights and consider switching to gas for your cooking needs.
• Living space: Affording a space to stay has also become a financial concern for many consumers. The impact of ever-increasing interest rates left many homeowners with no choice but to downscale. While this may seem like the best option for many people, it is important to consider that smaller properties in complexes and the like often come with levies and hidden costs that could soon see you out of pocket too. Research all expenses you will incur before you decide to make that move. If your home has extra space, you can also consider renting out a room or cottage for additional income but remember that it will incur additional taxes, too.

ALSO READ: SA consumers surviving on credit in cost-of-living crisis

Whatever you do, do not cancel your insurance

• Insurance and medical scheme expenses: Financial dire straits often see people resorting to cancelling their insurance policies to help ease their load. “This is an incredibly dangerous thing to do as it could expose you and your family to financial ruin,” says Szemerei. He suggests that you consider other ways to reduce your premiums while making your insurance work for you:
  • Get quotes on your homeowner insurance and compare that to what you are currently paying through your bank or bondholder. Switch your insurer if you have to, but first see if the cover will change.
  • 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.
  • Review your cover regularly to keep track of policies and cover, especially if your life or circumstances have changed.
  • Reconsider how effective your policies are. Are they still relevant and will they achieve the intended outcome should something happen?
  • Relook your insurance cover 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.

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Remember to make room for savings

During challenging financial times, people are forced to adjust and prioritise where they spend their money.

“It is just as crucial to make room for savings and it is recommended that you speak to an advisor or financial planner for advice, particularly when you want to save on your insurance. It is possible to achieve your financial goals and live a good life. With the right advice and financial behaviour, it is within your reach,” Szemerei says.