Feeling the pinch. How the average South African is stretching the R
22 October 2018 FINANCE
By: Natasha Archary
Could someone give us protection from the spiraling increases in EVERYTHING? With another huge petrol price hike expected later this month, the country in a recession and the sky-rocketing cost of living expenses, how is the average South Africa stretching their rand?
Consuming debt is the reason most South Africans are unable to save money at the end of each month. With many companies being hit by the recession and the result of a low turnover the past financial year, thousands of South Africans have since been assigned to unemployed status.
In the past five years, the cost of living increased exponentially, while savings rates have dropped significantly. According to the Old Mutual Savings and Investment Monitor, only 42% of South Africans have banked cash savings.
With personal loans on the rise amongst all income groups, it’s evident South Africans are struggling with the difficult economy.
Stretching the R’s
As it is, South Africans are adopting the following measures to try to stay within their means:
- Waiting for discounted specials
- Not going out/resisting the temptation to overspend
- Packing lunches from home
- Eating in and curbing the dining out
- Finding ways to supplement income
- Cheaper shopping outlets for necessities and basic food
- Putting off large purchases
- Buying in bulk
- Public commuting
- Changing to cheaper brands
This means that additional expenses for insurance, healthcare and monthly premiums such as gym memberships are all being reconsidered or downscaled. Inflationary costs increase and yet salaries remain stagnant, which puts pressure on the average South African household.
Many companies have put freezes on the performance bonuses or thirteenth cheques, which paints a dim picture for many as the festive season approaches. Financial advisors caution against using credit cards to make purchases. If you cannot avoid doing so, ensure you do not let your debt exceed 35% of your net income.
Failing to make your monthly repayments has serious consequences. You risk losing your assets and falling into a bad credit rating, which sullies your name.
The current economic situation has us all cash-strapped with no end in sight. How are you stretching your rands? Share with us by tweeting @KayaFM95dot using the hashtag #KayaOnline