• Work out your expenses versus your income taking into account the extra 1 per cent. Remember certain basic food stuffs are tax exempt but transport, electricity and water still attract VAT. Being proactive and self-disciplined with your money is an essential stepping stone to financial empowerment. Openly evaluate your expenses and have candid discussions with your family about money management.
• Deal with debt. It is always better to pay off the smallest amount of your short-term debt first, like credit cards and store cards, as these have a higher interest rate than your long-term debt. Ideally you should keep the number of transactional cards to a minimum, since each card will attract monthly fees.
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• Be careful of cash withdrawals. Remember – even if you use cash to transact it can be expensive, since cash withdrawal charges are usually high, unless you get free ATM withdrawals. Rather consider swiping your card for purchases, particularly if you receive free POS transactions on your transactional card. This will end us saving you on transaction fees.
• Consider consolidating your debt. You may want to consolidate all your debt to avoid duplication of fees. This means you will only have one monthly fee, instead of multiple monthly fees on multiple loans.
“The implications of the VAT increase can be confusing to fully understand. But, as long as you keep yourself informed throughout the process and make a conscious effort to change habits, modify your household budget and re-think you grocery list and credit habits, you can avoid any financial blunders that can occur as a result of this change,” Thompson concluded.
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