The coronavirus pandemic has been a reminder to South African consumers that anybody can get caught in a financial bind. And the cost of living is playing havoc with our finances…
Basic living expenses like food, fuel, utilities, childcare and healthcare are on the rise. And consumers are battling to keep their finances afloat.
A survey by M4Jam, a big tech company, found that South African consumers are finding it harder to get by each year. But particularly since the onset of the covid pandemic.
The survey paints a worrying picture.
South Africans have been pushed towards the poverty line because of the pandemic. Household income has severely affected millions, and many have simply not been able to recover.
Consumers have turned to their credit cards, savings and retirement funds to help make ends meet. However, consumers are battling to pay off their debt. A shocking 46% of consumers are past due on their debt repayments.
According to the financial service company, Transaction Capital, 34% of South Africans are forecast to fall out of the middle class.
Consumers are now having to choose between paying for basic living expenses or paying off their debt.
Basic needs have become less affordable for all of us. And rising prices will continue to hurt consumers who are already struggling financially.
Here are the top 5 rising costs you need to keep an eye out for this year and tips on how to keep them from spiralling out of control…
1. Water and electricity spikes… the real cost of keeping the lights on
The National Energy Regulator of South Africa has approved an Eskom electricity increase of 15.63% effective from 1 July 2021.
And let’s not forget that electricity tariffs have already increased by 512% from 2007 to 2020.
You are not alone if you allow the increasing cost of your most basic needs such as water and electricity to go unnoticed…
Water tariffs have also increased. Even faster than electricity tariffs over the past 25 years by an alarming 1270%.
On average your geyser is responsible for 40% of your electricity bill. Save money on your utility bill by using your geyser sparingly. A Stellenbosch University study found that you can reduce your geysers’ usage by 18% by scheduling your geyser and only taking one bath or shower per day per person.
Hopefully, you’re already using your lights efficiently by switching them off when they’re not in use. To minimize the impact that your lights have on your electric bill, you can switch out the bulbs for Compact Fluorescent Lamps (CFLs). These bulbs last 10 times longer and use less electricity. This will save you money in the long run.
2. Cost of fuel and public transport increase significantly
Fuel increases have become the norm, but that’s not to say we are happy about it.
The cost of fuel has increased significantly during the lockdown. Fuel is now 37% more expensive than it was before the lockdown.
Coping with the increasing fuel costs has become stressful. Even though many of us still work from home, it’s an extra expense that will leave us in a difficult position if not budgeted properly.
How do you maintain your car to save on fuel costs?
Harsh acceleration is the main reason for high fuel consumption. Rather pull away slowly and gently. Avoid high revs and overworking the car.
Use momentum to your advantage by lifting your foot from the accelerator on a downhill. This reduces the amount of fuel being used.
Using your aircon wisely can help reduce your monthly fuel expenses. Use your car heater or aircon sparingly when you drive. Turn your heater or aircon off when the car has reached a reasonable temperature.
3. The cost of food increased 7% in the past 6 months
The cost of food increased by 7% over the past 6 months and as fuel costs continue to increase so will the cost of food, making it harder to provide for our families.
Many struggling South Africans are paying on average R300 more for their groceries than before.
While 34% of South Africans are expected to fall out of the middle class, keeping up with the increase of increased living expenses becomes very difficult.
Before going grocery shopping, raid your pantry and see what kind of meal you can make with what you already have. Make use of what you have before buying unnecessary items. This will reduce the number of items you’ll need and save costs.
The best way to budget for groceries is with cash. Paying with cash restricts you from going over your budget, you’ll know exactly how much you have to spend.
Making a meal plan for the week and buying only what you need will go a long way. Make a list of what you need for the meals you’ve planned ahead of time, and stick to that list. Only buy what you need.
4. Healthcare in South Africa has increased by 4% since the Pandemic
On average, both medical aid services and medical insurance increased by 4.3% over the past year. In the past 12 months, doctors increased their fees by 3.2%, while dentists increased their fees by 4.3%. And the cost of visiting a hospital has increased 3.2% since February 2020.
Prioritizing your monthly healthcare expenses has become more important than ever before.
Know what rates your doctors charge. If affordability is your concern, it might be better to shop around for a provider who charges NHRPL rates. If visiting a specific doctor is more important to you than cost and you’re happy to pay more, you’ll know upfront exactly how much you’ll be paying.
Tap into any network arrangements your medical scheme may have with GPs.
Some medical schemes have network arrangements to pay participating doctors directly. This reduces the administrative hassle and keeps costs down for members. Again, read all the information you have access to about your medical scheme and make use of their online tools to find out who the network providers are before you book an appointment.
Pay cash for over-the-counter medicine. Don’t claim over-the-counter headache tablets, cough preparations and the like from your medical scheme. Paying cash will help the money in your medical savings account last longer and prevent your self-payment gap from increasing (if you have these on your plan). This way you’ll have funds available if you need more serious, more expensive out-of-hospital treatments.
If you’re in a position where you can’t afford healthcare at all due to debt and other monthly financial obligations, debt relief may be a viable option for you.
5. Schooling costs have continued to spiral in 2021 despite tough economic conditions.
Naturally, as a parent, you want to ensure your child receives a quality education so that they have a chance to succeed in life. School fees already make up a large portion of a family’s monthly budget.
Although primary and secondary school fee increases have slowed down in 2021 compared to 2020, the migration from classroom to digital came with its hidden costs and challenges. Laptops and a solid internet became an extra expense that many families weren’t prepared for.
According to the Stats SA survey, primary and secondary school fees increased by 2,5% and 4,3% respectively in 2021, compared to 7,3% and 7,6% recorded in 2020. “Increases in crèche fees were similarly lower at 2,9% compared with 6,7% in 2020,” Statistics SA said.
Fees at universities and universities of technology increased on average by 5,1% in 2021, higher than the 4,7% rise recorded in 2020. University boarding fees increased by 6,5% in 2021, slightly higher than 2020’s 5,9%,” Statistics SA said.
How do you cope with the increasing living expenses?
All of these factors contribute to you surviving and supporting your family during a very difficult economic time. It can be extremely stressful when you can’t cope financially because of factors you have no control over.
Many consumers are turning to debt relief programmes when they are unable to pay for basic living expenses because of debt.
Survival is about keeping a roof over your head, water in your tap, food on your plate and the lights on. But when the cost of these most basic needs becomes difficult to maintain it may be time to re-evaluate your current financial situation.
A debt relief option like debt review may be the perfect solution for you.
The debt review process will reduce your monthly debt repayments so that you have more money available for living expenses such as food, electricity, fuel and schooling.
If you’re struggling to pay all your debt repayments and monthly living expenses, leave your contact information below and one of our consultants will contact you shortly.