Consumers have been struggling to keep up with the impact of high interest rates on their bond, car, and debt repayments. Additionally, The South African Reserve Bank has announced that the repo rate will remain at 8.25%. The bank has emphasized a balanced evaluation of risks to medium-term growth while highlighting the increased risk of inflation.

In 2023, inflation has been at a steady 5.5%, but it is predicted to be revised down to 5.0% in 2024.

While this may seem complex, it will have further negative implications for South Africans if it remains high. The cost of living will be heavily impacted requiring all individuals to tighten seatbelts. Unfortunately, salaries aren’t expected to increase anytime soon, so it’s important for everyone to prepare themselves. Although many of these numbers are based on speculation, they do not seem to be too favorable in the short term. 

With Increased Interest And Stable Inflation, Here’s What You Can Do…

• Assess your budget: With fluctuating inflation rates, regularly assess your budget to avoid overspending on necessities and other budget items.
• Reduce your debt: It is always important to make sure that your spending does not exceed your income. Therefore, do not fall into a debt cycle that will be hard on you in the future. Pay your debts on time and try to eliminate all high interest debt.
• Plan for the future: Due to the unstable state of finances in South Africa, it is important to plan for the future by contributing to an investment or savings plan. That way you can have a clear view of the bigger picture.
• Prioritise your emergency funds pot: Put some money aside from your monthly income for unexpected emergencies. This will help you avoid having to borrow from banks when unforeseen circumstances arise.
• Track interest rate trends: A key part of being ready is understanding interest rates and the possibility of interest rate reductions. In addition, It’s essential to understand how interest can affect your spending, savings, and investment strategies.
• Seek help from a financial planner: Financial planners offer financial advice by completing risk and affordability assessments and seeing how you can cover yourself as well as grow your wealth. 

Pro Tips To Guide Your Finances During The Year

Pro tip 1: Buy groceries in bulk and try to plan your meals for the week. Reduce grocery store trips to cut fuel and food costs. If you can, find a lift club.

Pro tip 2: Plan trips on time whether you visit friends, stores, or just go out randomly. Also, limit your use of air conditioning, and wait till the traffic rush subsides so you can save on fuel.

Pro tip 3: Track your electricity usage and switch off any unnecessary lights. Find meals you can make and refrigerate if you can. 

Effects Of The Budget Speech On Debt

South African consumers should be cautious of their debt levels, as many rely on credit and loans to bridge the gap between paydays. The finance minister predicts a growing deficit, potentially causing higher interest rates on loans and bond repayments. It’s always a good idea to approach debt with caution and to keep a close eye on your finances.

Vantage has noticed many instances where customers turn to a Financial Consultant during changes in the cost of living or their debt profiles. We want to inform you that Vantage provides a free financial assessment for all customers. The aim is to save you money in the short and longer term and ease the burden of debt.