Inflation softened slightly with the latest StatsSA figures showing headline inflation dropping to 5.3% in March from 5.6% in February, however, the cost of living remains a concern, Old Mutual says.
John Manyike, head of Financial Education, Old Mutual offers a clear choice. either accept the increasing costs and watch your purchasing power decline or take action to stretch your budget and plan for a secure future.
“While many factors driving price hikes lie beyond our control, such as inflation-induced interest rate increments and global geopolitical events like the Russia/Ukraine conflict affecting food prices, practical measures can mitigate the impact,” Manyike says.
Manyike shares practical ways that people can be money savvy.
Budgeting is key
Tracking your expenses will allow you to understand how your spending habits can help you make informed decision. This way you see where your money is going.
Your budget should prioritise essentials by allocating funds for necessities like housing, food, and utilities. Understanding the difference between needs and wants will allow you to prioritise essentials.
You should also try to reduce your expenses by closing unnecessary accounts, shopping cheaper brands, cutting down on luxuries and consolidating subscriptions.
Managing your debt
To get a handle on your debts you should try paying off your high-interest debts first. This will allow you to save money in the long run.
People who are deep in debt can also try debt consolidation, which is the combining all debts into a single loan with a lower interest rate.
According to Manyike, debt consolidation means that people will only have to make one monthly payment and there is immediate savings on interest costs.
Managing your debt properly and making payments on time will allow people to build a good credit score. On-time payment can improve your creditworthiness, which could potentially lead to lower interest rates on future loans.
If consumers find themselves over-indebted, they should seek professional help. Debt counsellors can negotiate with creditors on behalf of consumers and offer people legal protection so their assets cannot be repossessed.
Diversify your income streams
Manyike said that if it possible people should consider diversifying their streams of income.
“Think about a side hustle, rental income or investing to supplement your income,” Manyike said.
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