10 Ways to save money and boost income following the rate change

PHOTO_BUDGET_WEALTHY_250215

File: It is expected that wealthier South Africans will get taxed more on the money they make from selling their stocks, bonds and property.

File: It is expected that wealthier South Africans will get taxed more on the money they make from selling their stocks, bonds and property.

The South African Reserve Bank (SARB) has announced a hike in the repo rate of 25 basis points to 6 percent, with effect from Friday 24 July.

This is bad news for borrowers (those that have home loans, credit cards, personal loans etc.) - particularly those who have over-extended themselves.

However, this is a golden opportunity to cut back on unnecessary expenses and boost your income if you are struggling to make ends meet, believes Angelique Ruzicka, editor of personal finance websites Justmoney and Moneybags.

“Credit will be more expensive. And this doesn’t help consumers because they have been squeezed by prices increasing elsewhere too (petrol, food etc.). But this shouldn’t stop consumers from making some financial gains elsewhere. It’s possible to cushion yourself from this rate hike blow and other increases through adjusting your spending behaviour or boosting your income in other ways,” said Ruzicka.

It’s also National Savings Month and Justmoney has put together 10 tips that can help consumers free up some cash or earn a bit of money on the side to boost their income:

10 Ways to save money and boost income following the rate change

1. Firstly, go through your budget and all your expenses and see where you can cut back. “If you don’t know how to create a budget make use of online money management tools to see what you are spending your money on and where you can cut back. When it comes to financial products, speak to your financial advisor. Financial products change and new ones are launched that could be cheaper, while still offering the same benefits. Just make sure you switch at the right time so that you don’t get penalised,” said Ruzicka. 

2. Save on bank fees. “You don’t need a gold card or a private banker. If you are paying too much in bank fees speak to you bank about downscaling to a simpler, cheaper offering (e.g. on your cheque account, credit card) or switch to another bank. You can compare bank accounts on Justmoney too,” said Ruzicka.

3. You don’t have to buy the most expensive brand when you do your groceries. “Compare prices and downscale your brand level, for example to house brands if they’re cheaper,” said Ruzicka.

4. Buy second hand, not new. “Clothes, furniture and cars are just some of the things you can buy second hand and save money in the process,” said Ruzicka.

5. Create lists and stick to them before you go out spending, be it for groceries or clothes shopping. “If you’re disciplined and stick to your list you have less of a chance of being distracted by other things that may grab your attention,” said Ruzicka.

6. Shop online so you can keep an eye on how much you are spending. “When you buy groceries online, for example, you can keep an eye on your spending as it calculates your totals immediately. Before you go to the checkout you can peruse your list again to see if the item you are buying is really necessary or you can swap it out for a cheaper brand. This is something that’s not so easily done when you’re at the store and feeling rushed. But take into account extras such as delivery fees,” explained Ruzicka.

7. See if you can earn an extra income. “If you’re allowed to freelance in your spare time and it doesn’t clash with your day job then consider doing that. Start a hobby that could earn you money on the side like knitting or sewing. If you’re not the type to engage in a hobby like knitting consider earning money from micro-jobbing sites like M4Jam (Money for Jam) and Answered,” advised Ruzicka. 

8. To bulk up your savings account sell your unwanted possessions. A company like Zwipit, for example specialises in buying used and new mobile devices. “Check that drawer where you keep all your junk cables and spare cell phones or dig around your attics, sheds and spare rooms to see if you can sell anything on websites like Gumtree to make extra cash,” said Ruzicka.

9. Cut down on your transport costs. “If you don’t live close to where you work consider carpooling or public transport and calculate whether the alternatives are cheaper. If they are, then make the change,” said Ruzicka.

10. Get rid of unnecessary expenses and ‘nice to haves’. “If you’re struggling to pay your medical bills then that’s when you get rid of things like DStv and other luxuries, like coffee from the likes of Vida, etc. If you are really going to miss your movies or series consider ditching DStv for online streaming entertainment hubs like Vidi which are much cheaper. Also cut down or get rid of your coffee intake. If you have two cups at R20 a day from your favourite coffee haunt you’ll be wasting R800 a month,” said Ruzicka. 

“The rate hike will affect those with a home loan and other forms of credit and consumers may be in for further rate hikes this year. But consumers struggling to make ends meet could, with a little bit of ingenuity and through realistic cuts on expenses, find ways to cushion any further rate hikes or price increases that could affect their income,” concluded Ruzicka. 

-Justmoney.co.za is a personal finance website and has been created to help South African’s save money by demystifying financial services and helping them to make informed decisions about their money.