It is no secret that South Africa is currently facing a cost-of-living crisis. With inflation at a record high and salaries stagnant – it has pushed thousands of South Africans to cut costs wherever possible in order to survive the month. For others, the cost-of-living crisis has left no other option but to utilise some form of debt or borrowings in order to make it through the month. 

The Rising Cost Of Living In South Africa

Cost of living has increased quite significantly over the last two years with 2023 recording the worst yet. With inflation still at a staggering 6.8%, and well above the government’s goal of 3-6%, it has pushed many South Africans to the limit. Consumers across the country are facing the same effects with increases in the electricity tariffs, water, property taxes, new and used vehicles as well as soaring petrol and diesel prices. These resulting increases are showing signs that South Africans are more cash-strapped than ever. 

So, What Are South Africans Cutting Back On To Deal With This?

With the rise of cost of living, this has pushed many South Africans to cut expenses in order to make ends meet. This is a worrying sign, as mentioned above, that consumer salaries are remaining stagnant due to the challenging economic state. Consumers are considering taking risks with their shrinking budgets. 

In an article by BusinessTech.co.za, research was conducted with 300 nationally represented consumers. According to the survey, consumers are slashing their gym memberships with one in four respondents claiming they cancelled their membership. Additionally, 18% of respondents also cut DStv from their budgets. Comparatively, 10% of the respondents also cut household insurance from their budgets. Additionally, 9% of respondents in the survey also cut medical aid from their budgets. 

Do A Deep Dive Into Your Budget

Doing a deep dive into your budget may seem like a daunting task, however, this will allow you to uncover any wasteful expenditure and possible saving opportunities. It may be worthwhile to carpool with friends or family to and from work each day. If you have any subscriptions you are no longer using, cancel them. Even the smallest amounts can add up to a larger amount. 

If you are guilty of dining out or takeouts, it’s important that you reduce it by as much as possible. Shopping or luxurious items can quickly drain your pocket and damage your budget. Additionally, being more mindful towards your electricity and water bills can help you save a significant amount of money each month. 

Many South Africans Do & Will Resort To Debt To Fill Their Financial Gaps

With increased costs of living, many South Africans will resort on debt to fill their monthly shortfalls. With the high inflation rate, the government intervenes by increasing interest rates. With the intervention from the government, utilising new credit and even current debt becomes significantly more expensive. With more credit being utilised each month to cover shortfalls, consumers are more likely to become over-indebted as their monthly repayments exceed their income and they start to enter dangerous debt cycles.

Here Are Some Financial Tips

1. Draw up a budget – having a budget can be extremely useful to categorise and track your expenses each month. You can decide to keep it simple or utilise a budget ratio such as the 50/30/20 split. 

2. Cut expenses – reducing your monthly expenses can be a difficult task if you don’t know where to start. However, startswith cutting unnecessary or under-utilized subscriptions, driving less, using less water and electricity and reducing your dining out and takeaway expenses. 

3. Start a side hustle – find a part-time job over weekends or after hours to create some additional income for yourself or your family. With the smallest additional income contribution each month, it can create a significant impact on your overall financial well-being. 

4. Look at debt solutions – there are two formal debt solutions that South Africans can currently make use of. These are known as a Consolidation Loan and Debt Counselling. Each formal debt solution has its own benefits and conditions. However, the main goal of consolidation is to provide another chance to the consumer to improve their financial well-being.