As South Africans brace for the upcoming VAT increase, these practical strategies can prove invaluable in navigating a challenging economic landscape and making sound financial decisions.
Recent figures from Statistics South Africa (Stats SA) lay bare the challenges faced by consumers. In January 2025, the Food and Non-Alcoholic Beverages category recorded a staggering year-on-year price increase of 9.1%, alongside an 8.6% rise in transport costs.
While interest rates remain steady, the impact on disposable income is becoming increasingly apparent, leading many households to feel the strain.
Head of Marketing at financial wellness company Paymenow, Denise Neethling, said consumers need to be proactive as we face the upcoming VAT increase, which will have a widespread impact on everyday expenses.
"As we continue to navigate rising living costs, it's essential to adapt our financial habits, especially as current inflation and interest rates offer little relief," she said.
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Effective strategies for financial management
Create a Comprehensive Budget: Begin by analysing your monthly expenditures. List both essential and non-essential items to identify cash flows and pinpoint potential areas for cost-cutting ahead of price hikes.
Shop Smart and Plan: Make the most of sales, discounts, vouchers, and loyalty programmes at local grocery stores and retailers. Planning meals for the week can help reduce unnecessary spending. Buying in bulk and preparing meals in advance may prevent costly takeaway orders when time constraints arise.
Track Subscription Services: Evaluate ongoing subscriptions and memberships, cancelling those that are infrequently used. This small adjustment may free up much-needed funds.
Monitor Utility Usage: Simple changes such as switching off unused lights, unplugging chargers, and using energy-efficient LED bulbs can lead to significant savings on electricity bills. Additionally, practicing mindful water consumption is vital to lower water charges.
Plan for Emergencies: It is essential to build an emergency fund to cushion against unexpected expenses. Ideally, this should cover at least three months of expenses; however, starting with a modest amount, such as R1000, can also be beneficial.
Leverage Financial Tools: Explore new financial solutions like earned wage access, which allows workers to tap into wages they’ve already earned before payday, aiding in managing cash flow without resorting to high-interest payday loans.
Utilise Free Resources: Many companies, including Paymenow, offer free financial literacy resources. Major banks in South Africa also provide valuable information online. Enhancing financial knowledge empowers consumers to make informed decisions.
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