6 Ways to Save Money as SA Slumps in Recession
With Junk status (read that explained in layman’s terms) and SA officially being in a recession it means rising costs (I know I can see this every time I shop!). So enough feeling sad and sorry about it, here’s some simple action you can take to save some of your hard earned Rands for your business and personal life. But before I begin, I can’t over emphasise the importance of budgeting (details coming soon in a blog).
Where can we begin?
- Insurance. Yes, it’s a grudge purchase but ask those who lost everything in the Knysna fires if their insurance was worth it. So as much as it can save us when we may lose everything that’s not why I raise it here. Insurance companies are great at just adding inflation to your premium annually – so shop around every couple of years for a more competitive quote. Your car devalues every month, but most insurance companies don’t take that into account – hats off to King Price Insurance who actually do!
- Say NO to Hire Purchase (HP). Paying off anything in instalments will cost you more (do the maths), it just wouldn’t make business sense to effectively give you a loan without making you pay for it, and pay for it, you do! You will end up paying at least 50% more for the benefit of having that item now. I know we live in a world of instant gratification and everything has to be had NOW but think of it this way – if you save for a couple of months to buy the computer cash, you can most likely afford both a computer and printer with the money you saved.
- Interest on credit cards. Ok, you won’t do HP but at least you have a credit card and as long as you pay off the minimum balance you are in the clear, right? WRONG! Credit card interest is the highest interest out there! And very few read the small print! (see – What your credit card is actually costing you). Some credit cards charge over 20% interest and then when you don’t pay it off each month you will be paying interest on interest. Pay off your credit card each month and save, if you can’t afford to get a small loan with more reasonable interest and pay off your balance and then begin the habit of clearing your balance each month.
- Cell phone bill. It can’t be just me that gets sneaky surprise (high) bills from cell phone companies?! I’m very prudent in this area and use my husband’s old phone on a data and call package for just over R100. The other day, however, I ran out of data and increased my limit by a cash amount – for the next 2 months I received bills which included the total of my new limit. So I added an additional bundle of data and while it has slightly increased my original cost, they are again contained to about half of my open limit, with more data. This is not my first experience where my excess limit seemed like it became a “target” to be charged by the cell phone company and I know I am not alone. Check your contract and rates and manage those cell phone bills which just seem to escalate monthly. And maybe I’m just too much of an accountant at heart but WhatsApp calls are working so well these days – why pay expensive call charges when you can use cheaper data?
- Car. A status symbol to so many South Africans, but do you really need a fancy car (or even two in the family), don’t you just need something to get you from A to B? At the very least, sell one and have the 2nd in the family as a cheaper run around car. A couple of years ago we bought a big car which was a “gas guzzler” – you pressed the accelerator and started counting the cost… R20, R50, R100… my husband had to fill up on a trip from JHB to make it home to Durban! We returned it within the week. With the cost of petrol rising you want as economic car as possible. Look into a maintenance plan for your car to save you the headache of large part replacement costs. In fact, just this week Volvo released that they will stop producing petrol-only cars by 2019, so maybe petrol costs will be redundant altogether soon?
- Budget. And stick to it! We all hear this word and know we should get around to it as it is vital to control where we spend our money and how much. If you don’t control your money, it will control you. I promise my next blog will cover key areas to make this easier for you
And now to choose at least one and take action to drive down costs. These tips will save you on your bottom line (profit)!
Also related – read my blog, “profit doesn’t equal cash” to better understand one of the key blocks to financial understanding.