INFLATION CALLS FOR PEOPLE TO BE CREATIVE WITH THEIR MONEY
Thursday, November 17, 2011
The past year has been tough on consumers’ pockets, and with the consumer price index racing towards the 6% range, it’s going to get tougher for people as they are forced to make do with getting less for their rands.
“While the rising petrol price and rate of inflation have experts pointing to a dreary festive season, the outlook for the start of 2012 has little promise of being much better. In fact, it’s likely to be pretty bleak from a financial perspective for a lot of South Africans.
“As it is, people’s money is going 5.7% less far than it did this time a year ago thanks to inflation. On average, prices increased by 0.4% between August 2011 and September 2011. This trend is set to continue and with increases in costs like school fees, medical aid and insurance amongst others.
“Consumers are going to have even less money from January than they do now, and they are going to have to become much more creative about how they allocate and manage their money,” says Thomas Creamer, Telesure MD.
For some, giving up a few luxuries might be all it will take to absorb the impact of rising inflation, high petrol prices and increases in other living costs, but for others some drastic cost cutting is necessary.
Creamer advises consumers to start preparing their budgets for the New Year now so that they can implement their cost-cutting tactics before annual increases come into effect.
“Draw up a budget. It doesn’t have to be complicated. A simple list of fixed and non-essential expenses against your income is all that is required. Include everything that you spend money on every month, from rent to your home loan, electricity, your cellphone, medical aid, groceries, petrol and domestic worker. This will give you a decent understanding of where your money is going every month.
“By now, you should know what your medical aid and insurance premiums, children’s school fees and other monthly costs are going to be for 2012. If you don’t know yet, start gathering this information from the relevant service providers as soon as possible to give you enough time to shop around for better prices if you have to. You may be pleasantly surprised on how much you can save.
“If, based on your list, it appears that you have, or are going to have, a shortfall when annual increases come into play, you need to urgently seek ways to cut back,” says Creamer.
Some of the possible areas where you can cut back include:
Creamer concludes saying that people who are unsure about how to draw up a budget or where to apply cost cutting efforts should speak to their bank or a debt counsellor.