13 ways to reduce your living costs in SA with prime rate at 11,25% – the highest level since 2009

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The cost of the average household food basket increased by R572,64 or 13.1% more from R4 355,70 February last year to R4 928,34 February this year.
The cost of the average household food basket increased by R572,64 or 13.1% more from R4 355,70 February last year to R4 928,34 February this year.
Peter Dazeley/Getty

Just as we thought we finally had a handle on sticking to a budget for these tough economic times, we got SMSes notifying us our debt just got more expensive.

The SA Reserve Bank’s monetary policy committee hiked interest rates by 50 basis points to 7,75%. And it’s no April Fool’s joke, unfortunately.

Read more | Food the greatest expense for those earning below R100k as SA returns to pre-pandemic spend levels

From 1 April 2023, South African consumers are going to feel the financial pinch even more as inflation rises.

“Citizens in the country are collectively tightening their belts to cope with the rising cost of living,” says Peter Olyott, CEO of financial services provider Indwe Risk Services.

“Together with monthly budgets, saving goals, managing expenses and picking up a side hustle, people are looking for other creative avenues to reduce their living costs.”

These are tough economic times for the ordinary South African just getting by.

People earning less than R100 000 per annum are spending 50% more of their income on groceries than what they did in 2019, according to Visa and Discovery Bank, who on 8 March 2023, released their SpendTrend23 report on data from over 350 million bank cards, $750 billion dollars of spend and more than 20 billion transactions across four countries.

Meanwhile, the Household Affordability Index released in February 2023 reported that the cost of the average household food basket increased by R572,64 or 13,1% more from R4 355,70 February last year to R4 928,34 February this year.

“We all have to check where we can turn our rands and cents around,” advises financial planner Adele Barnard.

If you are in a position to, she tells Drum readers, try buy your non-perishables in bulk rather than purchasing them as they run out to save money over time.

“I’m a huge fan of stockpiling. If you can, stockpile on your non-perishable items such as your toiletries and cleaning products. Per unit is cheaper,” Adele shares.

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She does bulk-buying herself to pay less – over time – for items she needs to use for the next few months as their prices rise, she tells Drum.

“If you buy in bulk, you’ve got that peace of mind as, per month, you’re saving money because you don’t have to buy the Sunlight liquid, bleach, roll-ons and the toothpaste, because, in essence, if it’s stuff that you need, you can’t waste.”

According to Peter, there are at least 13 more ways you can reduce or optimise spending to help ease your financial burden. These are his tips.

1) Be frugal. Cancel subscriptions you aren’t using anymore and buy second-hand items instead of something new.  

2) Consider carpooling. Try to limit the kilometres you drive by carpooling or ridesharing with family, friends or colleagues.

3) Improve your driving habits so you avoid harsh acceleration and braking, which increases fuel consumption. 

4) Be a maximalist. Instead of driving out to the shops every time you need to buy something, consolidate errands to save both petrol and time and do less frequent but larger monthly grocery shops.

5) Negotiate lower premiums. Remember to keep your insurer notified if you start carpooling and consider insurances which reduce the premiums if you drive less.

6) Budget. Create a weekly food menu and a monthly shopping list, which helps you avoid making impulse purchases. 

7) Become a bargain queen or king. Look out for specials and loyalty savings, and stock up when you see these non-perishable items on sale. 

8) Look out for deals. Plan your meals around supermarket specials but also ensure that you use the items you’ve already got in your cupboard.

9) Have some no-meat days. Rethink your choice of protein, which is often the most expensive items on your list and use staple ingredients to make multiple meals.

10) Become more aware of your electricity usage. Switch to energy-efficient light bulbs and where possible, replace old appliances with energy-efficient models. Seal windows and doors to prevent loss of heat in winter and loss of cool air in summer, and adopt better habits such as turning off unnecessary lights, putting a lid on your pot of boiling water and unplugging non-essential items that aren’t in use. Consider switching to gas for your cooking equipment as well. 

11) Sub-let if you can. Consider renting out a room in your home or getting a tenant into your garden or granny flat. This additional revenue helps you offset increased costs but remember to calculate all the tax implications at the same time. 

12) Downsize. Your rent or home loan, together with rates, utilities and maintenance are often a significant portion of your monthly expenses, and you could reduce these by downsizing to a smaller home or moving to a more affordable neighbourhood. 

13) Reduce extravagances. Cut back on your daily takeaway coffee and rather brew a pot at home or the office. Take a packed lunch to work instead of choosing a takeaway option and eat dinners at home rather than frequenting restaurants. 

What about insurance and medical aid?

“When looking for ways to cut monthly costs, people often turn to insurance and cancel their policies to ease their financial difficulties. But as life is uncertain, it’s impossible to predict when a life-changing event will impact you and your family, exposing you to potential financial disaster,” says Peter. 

However, he adds, there are smart ways you can reduce your premiums while making your insurance works for you which include:

  • “Obtaining quotations on your homeowner insurance (your home) and compare that to what you are currently paying through your bank or bondholder.
  • “Switching your building insurance cover from your bank to your insurer could save on bank costs, whilst getting a premium saving and enjoying lower excesses. Of course, your bank may also match your alternative premium which still achieves your goal. 
  • “Insuring all your assets with one insurer to simplify the process and enjoy a potential discount.
  • “Relooking your excess options and increase your excess payable to lower your monthly premium. This puts more risk on you as you must be able to pay the high excess should you need to. Effectively managing high frequency but smaller claims, is ultimately more cost-effective than passing on the risk to an insurer. 
  • “Making annual or biannual payments often results in a discount through your insurance company.
  • “Reviewing cover regularly to keep track of policies and cover, especially if your life or circumstances have changed. These could result in large premium savings. 
  • “Reconsidering the efficacy of policies. Are they still relevant and will they achieve the intended outcome should something happen?
  • “Relooking at your insurance covers to ensure that all of the potentially catastrophic exposures are covered first and properly, such as the ones that can ruin you financially. Then look at the items which are less crucial from a financial viability point of view, such as cellphones or sports equipment.
  • “Seeking alternative medical aid structures together with gap covers. In some cases it can provide really effective and comparable benefits at much lower monthly contributions.”

Peter and Adele strongly recommend reaching out to an adviser or financial planner for advice when you want to save on your insurance.

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