While South Africans faced a hike of VAT from 14% to 15% back in 2018, there has also been a recent repo rate cut meaning for many it can be a confusing financial period. These changes can also pose questions such as how will I be affected by this VAT increase? What can I do? And most commonly how can I still save money?
In simple terms the recent changes took effect whenever you purchased anything subject to VAT or fill up your car with fuel as the price will have increased since April 1st. but while you will be paying more for your usual groceries or petrol You can view a full breakdown of the 2020 Budget changes (including the increased fuel levy) here. However in this post we’re going to be focusing on six strategies to help you cut back when you need to most to lessen the impact of these budget changes.
Keep an eye on what you buy
While many groceries are subject to VAT, there are some basic staples that are zero-rated, or VAT exempt. These include things such as brown bread, rice, dried beans, lentils, legumes, dried mealies, canned pilchards or sardines, fresh fruit and vegetables, vegetable oil, eggs and milk. While you are saving on your shopping you will also be boosting your health.
Borrow responsibly and try to clear your debt
According to a 2018 report published in The Economist, more South Africans have loans than jobs, with an incredible 27m owing money to financial institutions while only 10m are formally employed, meaning there can be a cause for concern about debt. Think about contacting any financial providers to keep any bond or vehicle finance repayments as they are despite the interest rate cut. By doing this you can reduce your home or car loans meaning you can pay them off faster.
Manage the debt you have
If you do have any debt make sure you keep track of it. Make a note of how much you owe and to whom, work out the interest you owe on each debt and then pay off any debts with the highest interest rates first.
The easiest way to cut back on your outgoings is obvious, take a look at how much you spend and what you spend it on. You could be wasting money ordering in when you have food that you could cook, or even on expensive takeaway coffee. Become a sensible shopper and avoid temptation where you can.
Develop financial understanding
Don’t be someone who has no idea what is happening in the economy, as this is one of the easiest ways to lose track of how changes will affect you. Get educated on the current situation and try to keep up to date as new events take place so you can manage your money accordingly.
Look at your loyalty
Most people have a favourite brand when it comes to certain grocery items or want to buy the best clothing labels possible, but weigh up whether you can substitute a recognised brand for the same product from a different, cheaper retailer. Making cuts in this way for food can be so easy and you won’t notice the difference, while your clothing labels are no indication of your worth, and no one will ever see them!