Cash Strapped Tips: How to make your money go further

The cost of living has significantly overtaken the household income of already cash-strapped South Africans who are reaching for credit and costly short-term loans to plug their financial shortfalls each month.

The cause of the current consumer debt spiral, which is steadily worsening, is due to a host of price increases across goods and services, the more than 34 % unemployment rate, job losses and salary reductions over the last two years.

“Even those South Africans who have managed to hold onto their jobs during the global pandemic have had to brace themselves to face the drastically-diminished buying power of their money and there is no relief ahead for financially depressed SA consumers,” says Cyber Finance’s debt management specialist, Alain Le Roux.

According to the latest TransUnion Consumer Pulse Report for Q3 2021, 61% of consumers indicated that their household income was negatively impacted and that they had yet to recover in the wake of the COVID-19 Pandemic. Even more worrying is that 41% of consumers stated that they’ve been in arrears or missed one or more loan or bill payments in the last three months.

“We are seeing more and more South Africans across income levels opting for debt management solutions to mitigate the increasingly difficult financial landscape. The lower- and middle-income classes are desperate for some financial relief and are no longer staying afloat in a sea of ever-increasing prices,” says Le Roux.

There are steps that those struggling to make ends meet can take when their income is no longer enough to get them through the month. The following ideas can help them get their finances back on track.

Create a budget and understand where your money is going

The very first step to taking control of your finances is to figure out if your income covers your expenses.

Once you have a better understanding of where your money is going, it’s time to rework your budget. Look at how you can cut costs and re-prioritize money to cover basic living costs to put you in a better financial position or, at the very least, stop you from going into debt. As uncomfortable as it may be, an increase in expenses or a drop in your income requires that you make a change to your lifestyle to bring your expenses in line with your income.

Buy a cheaper home or rent a more affordable one

It is no secret that the South African rental market has taken a knock due to the pandemic. There are many rental properties that have stood empty for months. This is a prime opportunity to find a more cost-effective rental home.

Similarly, if you own your property, you could consider downsizing or moving to a more affordable area to reduce your bond repayments and ease the financial pressure.

Share or rent a room in your home

Cohabitating with family or friends is another way to reduce costs. Alternatively, you can rent out a room in your home and use that income to reduce debt or assist with rising living expenses. Bear in mind that that you need to pay tax on any rental income you earn so make allowance for the tax.

Buy a cheaper car, use public transport, or join a lift club

With record-high fuel prices, you can’t go wrong by opting for a cheaper, more economical vehicle. Not only will you save money on paying off a depreciating asset, but you will save on travel costs. The additional saving can be used to reduce debt or go toward easing monthly expenses.

If you cannot see yourself parting with your beloved car, consider joining a lift club to curb your transport costs.

If there is reliable public transport available in your area you could consider doing away with your car completely or taking the bus on occasion to save on fuel expenses. Buying a monthly bus ticket generally works out cheaper than buying ad hoc tickets.

Plan family meals

Planning meals ahead of time with the groceries you already have in your fridge and cupboards will reduce food wastage and costs. Take advantage of grocery-store specials by making dishes that utilise the ingredients on offer at the time.

Take a packed lunch to the office

By planning your meals, you can cook extra food at night to provide yourself and your family with lunch for the next day. In this way, you can avoid buying expensive convenience foods at work. Buy a coffee mug and take your own coffee and tea to work instead of buying an expensive takeaway beverage that can set you back R30 per day or more per cup.

Cancel subscriptions or memberships you don’t utilise regularly

Apps and software subscriptions, as well as a gym and other club memberships, can drain your money and if you do not need these services, you are wasting money. Many subscriptions services auto-renew monthly or annually to cancel them as soon as you can. Save more money by cancelling duplicate services such as Netflix and DSTV to cut your monthly expenses.

Unless you are going at least 2 to 3 times per week, a monthly membership may not be worth your while. Instead, join a walking or running group in your local community.

Spring clean your home and sell what you do not need

A quick and easy way to make some cash and pay off or reduce debt is to sell unwanted furniture and household items on platforms such as Facebook Market Place, Gumtree or Yaga. Your home will benefit from decluttering and it can give your finances a bit of a boost.

Do take the necessary precautions to protect yourself when selling items online.

Make the most of special deals and payday offers

Keep an eye out for special deals or special offer days when shopping to make your money go further. Many grocery stores offer loyalty programmes that provide loyalty customers discounts. Examples are PNP’s Smart Shopper or Checker’s Xtra Save programmes. Beware of loyalty programmes that charge a monthly fee unless you can fully benefit from the special deals on offer. Some programmes are very complex and unless you take steps to meet all the requirements of the programme you may not fully enjoy the benefits.

Start a side hustle

If you have some extra time or a unique skill, consider starting a side business to supplement your income. This could be anything to starting a morning lift club for your child’s school friends, selling products online or selling cakes for special occasions. Anything you enjoy doing can potentially increase your income if there is a need or market for that product or service.

When there is more month at the end of your money, making ends meet can often feel like an impossible task but there are many creative ways to stretch your Rands.

“Debt counselling is a great solution for those who are becoming reliant on debt to sustain their basic standard of living, Le Roux says.

Professional debt counsellors are trained to help you with every aspect of your finances.

You can approach a debt counsellor whether you are just starting to worry about your finances or if you are already in a debt,” Le Roux says.

The earlier you call in the experts the easier your debt situation is to resolve.

The worst thing you can do is to ignore the warning signs because it is likely to make matters worse, he warns.

“Help is at hand so don’t lose out because you were too afraid to reach out,” he adds.