We’re living in a time of economic uncertainty and this has a direct impact on many South African homes; it is therefore very important for you to manage your household finances in an effective manner. As noted by Old Mutual’s head of financial education, John Manyike, “In the same way that the national government takes a hard look at the state of the economy every February, and puts measures in place to strengthen it, consumers need to reassess their challenges and opportunities annually.”

Trying to manage your finances and making ends meet at the end of every month can be quite an arduous feat. However, reviewing and adjusting your household budget once a year, like the Minister of Finance does for the country, can make it a lot easier.

“Families were hit hard by the increase in the price of fuel and electricity last year, as well as the VAT hike. For some people, the situation has become so desperate that they opt for a quick financial fix like a fast loan, or rely heavily on credit and store cards to simply buy groceries,” says Manyike. He points out that this can be a financially crippling decision which only adds to long-term financial strain as it starts a vicious debt cycle that is very hard to escape. “It is more important than ever to become money smart to ensure you survive month-end Salticrax stress and start reducing your debt.”



Manyike offers the following tips to help you make sure that your household budget is shockproof:


1.       Commit to a budget

Compile a comprehensive household budget and stick to it. Make a list of wants versus needs, and focus on the needs. If and when you can afford it, you can set aside some money for one family outing or treat per month. Educate your family about balancing a budget and get them involved in working out the family’s financial goals and financial plan. Minimising unrealistic demands and expectations is a crucial aspect of budgeting.


2.       Cut down on your transport costs

Look for schools closer to home if transport costs are decimating your budget, or move closer to your workplace or children’s school. Find ways to cut down on the travel costs; consider using public transport on some days.


3.       Keep your family healthy

Plan healthy meals for your family, including lunchboxes for school and work; this helps avoid overspending on takeaways, tuck-shop and canteen lunches. Having a healthy family will help keep illnesses at bay and also reduce your medical expenses. Cut out sugar for health reasons and to save on sugar tax.


4.       Quit bad habits

Stop smoking and cut down your alcohol intake; you’ll save a lot every month. You will also avoid paying ‘sin tax’, the tax on tobacco and alcohol. As a non-smoker, you’ll be healthier and this will help keep your medical costs down.


5.       Stay up to date with financial news

Make a habit of reading or listening to the Budget Speech every year and take note of any taxation changes that could affect your financial decisions. To rent or to buy a property may be a question on your mind, for example. If so, consider the fact that properties under R900 000 are exempt from transfer duties altogether.



6.       Keep saving

No matter what, don’t stop saving. Stay committed to your long-term goals such as a tertiary degree for your child and a comfortable retirement for you. Take advantage of tax-free savings options.


7.       Don’t live to impress

Don’t put yourself under pressure by trying to keep up with the Kardashians, the Khumalos, or the Karims. Live according to your means and not according to your friends’ lifestyles (who may also be deep in debt behind the scenes). It’s okay to tell people that you cannot afford to participate in certain activities because of financial constraints—honesty will keep your finances intact.


8.       Learn to say NO!

Don’t let your children push you into buying things they don’t need and that you can’t afford. Teach your children about budgeting, planning and saving. Explain the importance of resisting peer pressure.

“Just like our government does every year at Budget Speech time, the toughest task is facing the reality of the situation and working out an achievable plan. Then work together as a family to stick to the plan, even during difficult months. You can also speak to an accredited financial adviser to help you stay on track.”


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