The recent spate of fuel price increases have had the predicted domino effect on the overall consumer price inflation. The biggest battle for consumers remains at the till as they fork out more on staples, like bread, flour, cereal, and maize.
Being prepared for harsh economic times is an essential part of financial health, whether you find yourself in the eye of the storm or not.
The bumpy ride has only just begun. Due to the war in Ukraine and its volatile impact on global financial markets, South Africans will simply have to bite the bullet for the foreseeable future. It is now a case of reprioritising expenses, saving money, and growing money through the right investment products.
Check out these 8 tips for riding out the current economic turbulence (and future slumps):
- Scrutinise your bank statement to determine your expenses. Be brutally honest in identifying what expenses can be downscaled or cut altogether.
- Separate essential expenditure (rent, fuel, insurances) from discretionary expenditure (entertainment, subscriptions, travel). Cutting back on discretionary spending is money you can recycle back into your savings account.
- Focus on repaying high-interest debt, like a credit card. Eliminating this debt could free up crucial savings in your budget that you can rather put into your emergency fund.
- Put at least six months’ worth of expenses in a liquid and accessible account as a crucial cushion to cover emergencies, retrenchments or pay cuts. This may seem like a daunting task, but it is possible through consistent, small contributions to a high-interest savings account or into a high-yielding investment account. The best scenario is to set up a debit order for an amount to go off your bank account each month.
- If you don’t already, start budgeting! There are many helpful budgeting tools available online to help you live within your means and not overspend. Budgeting in a strong economy can set you up to navigate a struggling economy with better peace of mind.
- Don’t panic and jeopardise your long-term financial security based on short-term economic events. Stay consistent with your investments and savings, especially for retirement. A bad turn in the economy may change within a year, while your retirement can last up to 30 years.
- Leverage your earning opportunities by maintaining close contact with people in the same industry or turning a hobby you’re good at into a lucrative side hustle. Extra cash could be a crucial way to bolster your income at a time when consumers are losing their purchasing power at a rapid rate.
- Take a short course to obtain training and skills you can use to find employment now and in the future. Keep learning.
Having an emergency fund and retirement savings are a massive relief in tough times. To weather the storm, the trick is to stay calm, stay consistent in good money management and ask for expert advice to enhance your current savings and investment accounts.
Brought to you by African Bank.