Tips to make the household budget stretch

Managing a household budget can be a challenging task, especially in the face of high interest rates, rising inflation, and electricity price hikes.

“Most economists predict that we will see our first interest rate cut of around 0.25% in September or November this year,” mentions Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa. “This will bring some much-needed relief to homeowners, but it is unlikely to solve all their money struggles.”

For example, the monthly repayment on a R1m home loan at the current interest rate of 11.75% over a 20-year term is approximately R10,837. At 11.5%, the repayment amount drops to roughly R10,664, allowing a savings of just R173 per month.

Once we experience an interest rate hike, this might help cover the extra cost in electricity following the tariff increases. It is also a good idea to find ways to lower your electricity bill. “There are a few inexpensive ways to reduce your electricity usage, but the most effective would be to explore alternative energy solutions such as solar. Although expensive, solar power will also have a positive effect on a property’s resale value,” Goslett mentions.

Some inexpensive ways to reduce your electric bill include:

• Set your geyser to a timer
• Switch to LED lightbulbs
• Use a power strip to easily disconnect multiple devices at once
• Use a gas rather than electric heater
• Install a gas stove

“Owing to the uncertainty of loadshedding, gas stoves have become a popular drawcard among buyers in South Africa. Installing one could not only lower your electricity bill, but it might also bolster your home’s resale value,” Goslett comments.

Electricity is not the only thing getting more expensive. In the June Consumer Price Index, food and non-alcoholic beverages increased by 4,6% year-on-year. Food is a major expense for most households. Planning your meals in advance can help you save money and reduce food waste. Create a weekly meal plan, make a shopping list, and stick to it. Buying groceries in bulk, cooking at home, and using leftovers creatively can also help you stretch your food budget.

“Stretching your household budget is no easy task. It requires a combination of awareness, discipline, and smart choices. I remain hopeful that the overall market conditions will soon start to improve and make things a bit easier for South African households. Until then, it can be useful to remember that every small change counts, and over time, these changes can lead to significant savings and a more secure financial future,” Goslett concludes.

Writer: Kayla Ferguson