As prices continue to increase in South Africa, so does the cost of living, i.e. living expenses. Consumers spend more of their money to pay for their daily lives. In the end, they have less disposable income to pay for their monthly debt obligations.
The cost of living is worsened by the interest rate hikes instituted by the South African Reserve Bank (SARB) over the past few years. The SARB increased interest rates to try to lower inflation. This is a global trend, as central banks globally attempt to slow inflation in the wake of global events like COVID-19 and Russia's invasion of Ukraine.
South African consumers are faced with the double blow of (i) rising prices but coupled with (ii) wage increases that are below inflation. This means that consumers will experience a decrease in their purchasing power. Their disposable income will buy fewer goods and services as inflation continues to soar.
As the cost of living goes up, consumers are pressed to spend more of their wages on paying for rent, mortgages, and groceries. In the end consumers will struggle to service their debt and end up defaulting on their obligations as they have less money to pay their debts.
Tips to Deal With Rising Costs
All hope is not lost. There is good news. While inflation bites and food, electricity, and fuel prices are rising every day, which you have no control over, you can control how you budget and but these items. Here are a few things that you can implement to deal with the inflation on your personal expenses and save money.
Budgeting
Tracking your income and expenses is an effective way of managing your money and understanding where your money goes. Here is how to create a solid budget.
Shop Around Before Buying
It is very important to do your research before making any purchases to find out which supermarkets have specials. Then have the grocery shopping list based on the specials. You can take this further by planning your meals as well. Grocery delivery services like Checkers Sixty60, Pic 'n Pay asap, and Woolworths Dash make it even easier: add all the items from your shopping list to your cart in each app, and then see which is cheapest in total.
Eliminate Food Waste
Before buying any food, take a good look at what is in your pantry before heading to the shops to replenish the food stocks. This will help in eliminating the number of trips to the shop and thereby save on groceries.
Change Where You Shop
Now may be the time to buy groceries from shops that keep prices low for their customers, e.g Shoprite, or those that have good loyalty programs, like Clicks.
Shop generic products
Generics are cheaper when compared to name brands. The taste and quality of the generics is often exactly the same as the name brands.
How Debt Sage Can Help
If you're struggling with the cost of living and falling deeper and deeper into a black hole of debt, our debt review solution could be for you. We can assist by reducing consumers monthly instalments to reduce your monthly debt obligations.