How to weather the economic storm of 2023
AS WE kick off 2023 and judging from every critic, editorial, WhatsApp messages and videos it is hard to recall a time when there were as many economic and political crosscurrents as there are now in our country.
The continuous and ongoing energy crises, rising cost of living, water contamination and a dysfunctional government are crippling our economy.
However, the intention of this column is not to paint a bleak and gloomy outlook but rather to share some personal saving tips to counter the economic head- and tailwinds that we currently face, as outlined below:
Staying positive and motivated:
Focus on your goals, be it financial or other and try to work on it daily in bite sizes.
Set just one or two priorities every day and put all your effort in to try to accomplish them.
Eating healthy, exercising and reducing undue stress in your life is paramount to being happy and motivated.
Developing a simple personal budget and sticking to it:
One of the most common financial problems for most people is not having a budget. A budget is a plan for managing income and expenses over a set time frame.
Creating a personal budget is a crucial step in managing your finances as it allows you to track your income and expenses, so you can make informed decisions about how to save and spend your money. By developing a simple personal budget, you can take control of your finances and work towards achieving your financial goals.
The first step in creating a personal budget is to gather all your financial information. This includes your income, expenses, and any outstanding debts. Once you have all this information, you can begin to allocate your expenses into different categories, such as housing, transportation, education and groceries.
Next, you will want to create a budget plan that outlines your income and expenses for the month. This plan should include your projected income, as well as your projected expenses.
Once you have created your budget plan, you will need to stick to it as closely as possible. This means tracking your expenses with priority being given to first paying off or servicing any outstanding debt and ensuring that you are not spending more than you can afford. You should make sure to set aside money for savings or that dream holiday.
It’s important to regularly review your budget and adjust as needed. With a little effort, you can create a budget that works for you and your lifestyle.
Living within your means and avoiding credit:
Most of us get influenced by the lifestyle of our friends and relatives. Ask yourself if you cannot afford it, then simply do without it.
As far as possible, you should endeavour to use a debit card or pay with cash when making purchases. This will help you to avoid the interest charges that come when buying on credit. Studies have shown that South Africans’ household debt has drastically increased over the past two decades.
Although having convenient access to funds sounds really good, many have found themselves trapped in its web. Additionally, borrowing also comes at a substantial cost.
Look out for special offers, cash discounts when buying clothing, electronic devices, gifts, etc. A good tip here is never to go grocery shopping without a list of what items you require to purchase.
Eating out and other entertainment activities can be very expensive, so try to reduce these. However, you can still enjoy your favourite meal occasionally by checking for “specials” on certain days of the week or month.
Saving wisely:
Financial freedom would be the dream and ultimate success goal for most individuals. While many financial experts urge us to save at least a quarter of our income, given the tough economic climate that we are in, at least 10% of your earnings should be saved.
Another way is to chat to the HR department in your organisation about restructuring your cost to company so that you receive the maximum tax benefit from deductions such as travel allowance, medical aid, and retirement annuity fund contributions.
Connecting with the Creator:
We live in a very fast and challenging world. Be grateful for the bounties that you have been blessed with in your life and pray to the Creator for help and guidance as life’s challenges and obstacles present themselves.
Make an effort to donate – be it in cash or kind – to charitable and welfare causes as this is indeed a source of immense blessing and through this effort a sense of fulfilment and inner peace will be felt in your life.