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Lockdown brought the South African economy to its knees. The year 2020 saw SA record one of its deepest contractions (-6,4%). However, in 2021 as the economy gradually reopened, there was a fantastic recovery, with SA’s GDP bouncing back to 4,9%.
While this was great news for last year, this year we face factors such as rising unemployment and higher labour costs, rises in consumer price inflation, the dynamics of the Ukrainian war, and more, which means our economy is still under severe pressure. Growth in income per capita has been flat since 2010 and declining since 2015 due to economic growth failing to keep up with population growth. According to Deloitte, South Africans will continue to be worse off over the next few years unless the country switches to a higher and more sustainable growth path.
In contrast, household consumption recovered well in 2021 (estimated at 5,6%), but is predicted to average just 2% over the next three years. As per Deloitte’s Global Consumer Tracker, household debt has increased, and consumers are particularly concerned about rising prices, keeping up with payments, putting money away, and reducing credit-card debt.
In spite of this, out of the 23 countries surveyed by Deloitte, South African consumers came out as the most optimistic about improvements in their financial situation over the next three years.
While the country’s economy is being rebuilt on the backs of entrepreneurs, households can do a few things to make a big difference when it comes to rebuilding their own personal finances.
Here are some ideas that will help:
Essentially, there are three steps to creating a budget:
Whatever is left over falls under your “discretionary spending”. Determine what percentage of that you can put towards savings, what percentage you can use to pay off credit-card debt, and what you can use for entertainment, gifts, etc.
Even if the subscription value seems small, reducing these kinds of expenses brings you one step closer to gaining financial stability. Restarting your home’s economic growth should be approached as an iterative process and done in small steps, not one big leap. Every bit helps!
See how you can reduce monthly household expenses, such as your water and electricity. Your electric bill accounts for about 12% of the average household budget. While you need electricity (as load-shedding disruptions prove) and water to live at home, there are many ways to reduce your utility bills:
If you own the property, see if you can refinance your bond to get a lower interest rate to reduce your monthly payments. See if switching building insurance providers will reduce your monthly insurance premium.
This is why it is so important to keep your insurance details up to date. Changes in your circumstances and driving habits could allow you to save considerably on your monthly insurance premiums. Or, it could be restrictive, as you may not qualify for the cover you had or want.
Focus on squashing debt. Switch to cash only as a reality check of money coming in and out. Start paying off a little extra on your credit cards and other debt. The quicker you get rid of your debt, the more money you will have left over at the end of the month.
Not only do Santam clients get the best in short-term insurance that offers affordable, value-add car and household insurance, but you also get added extras, such as:
Speak to your intermediary or get car insurance online from Santam Insurance today.
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