Petrol and electricity hikes – how to limit the impact

Following the increase in petrol and electricity prices, consumers will have to adjust their budgets. This is primarily because both these commodities are a necessity to a majority of South African households.
Dhashni Naidoo, Programme Manager: FNB Consumer Education, says “The increase in petrol and electricity prices will heap more pressure on already stretched consumers’ finances. The combined effect of the increase in electricity and fuel is likely to snowball into other expense areas. For example, an increase in fuel impacts transport costs which has a cumulative effect on the price of consumer goods, such as food. This coupled with electricity price hike will place a further burden on consumer expenses.”
“A change in habits can go a long way in containing the extent to which consumers are impacted,” adds Naidoo.
According the Naidoo, consumers will have to take practical steps to ensure they don’t buckle under these increases and she recommends the following:
Have a budget and stick to it
It does not matter how much you earn, you should have a budget in place to manage your expenses. A budget will help you monitor how your money is being spent and areas that may require some adjustments. This maybe a good time to examine how much you spend on non-essential items, such as entertainment with the intent of reducing expenditure on non-essential or luxury items. It is important to be cognisant of ‘needs’ versus ‘wants’ when allocating expenses. For example, you need transport when travelling to and from work daily so spending on transport is inevitable. Whereas if you are spending too much on entertainment such as movies and dining out, which is a ‘want’, you may have to relook this to ensure you are able to allocate funds to important expenses and still meet your financial goals.
Consider a lift club
It may be worth considering a lift club to lessen the blow of the petrol price increase on your pocket. If there’s a colleague who drives in the same direction towards your place of work, perhaps suggest travelling together in one car. If you remain consistent with this, overtime you will notice you are spending less on transport as compared to when travelling alone.
Manage your electricity usage
While the cost of electricity will go up quite significantly, households can manage what they pay by using electricity sparingly. If you have electrical appliances that typically consume a lot of power rather switch them off. For example, when you are at work during the day the geyser can be kept off to limit power consumption, the less power you use the less you pay. Another way of managing the consumption is switching off plug points when appliances such as a TV or microwave are not in active use.
Reduce debt
Make sure to pay your pay off outstanding debt as soon as possible. Often in difficult times we neglect payment on outstanding loans, or store accounts. However, the long-term implications of this can be catastrophic for consumers and resulting in long term financial distress. The sooner you can reduce debt, you are able to redirect those funds to savings.
Make room for savings
As costs escalate it will be more challenging to save, however it’s important to always put something aside. Remember that it’s not how much you put away, it’s the principle of saving consistently that matters the most. You can also create savings by shopping more economically. For example, buying bulk or shopping around for the cheapest price. Any reduction in spending is also a saving.
“Increases such petrol and electricity can have a major impact on households, thus they require a change in attitude to how we spend and change to our consumption and financial behavior,” concludes Naidoo.