The global economy has taken a major hit and the reality for most is that we are battling new salary cuts, retrenchments, and unemployment. We don't know when the financial pressure is going to let up and it would be helpful to think of our new financial pressures as a marathon rather than a sprint. So let's lace-up and check out some ways to save money during these difficult times.
Where to begin? Know the Figures
The first place to start with any saving endeavor is to get a comprehensive overview of your financial situation. If your financial security has been impacted by Covid-19 this may seem like a very scary exercise but it is essential to see the whole picture so that you can make informed decisions about your financial future. You may just discover that you can cut things that don't add very much to your life and save you a few hundred rands each month.
If you have several accounts this will require you to source all the current statements for all your accounts so that you can begin to build a picture of your current financial status. This may include gathering your car loan, home loan, bank accounts, credit cards, store cards, short term loans, pension or provident funds, savings, and investment account statements.
You want to get a total overview of what you own and what you still owe.
You could draw this up in an excel spreadsheet or simply type up a summary in a word document. But there are plenty of brilliant and secure tech solutions to help you. Old Mutual has a great app called 22Seven that is free to use no matter who you bank with. This app syncs all your accounts safely and categorises all your transactions. It then gives you an overview of your financial situation.
It categorizes your transactions so that you can see exactly how much you spend monthly on different categories. Did you know you spent R280 a month on takeaway coffee? Or R200 a month on takeaways per week? Now you do.
Once you have a full picture of your spending habits you can now make informed decisions about what you can feasibly cut out of your budget and keep what you're not prepared to give up. This helps you to not feel deprived as you can see what matters to you and what you'd rather not spend money on. Even if you find that you can't cut very much else out of your budget you will now know for certain that you are doing all that you can to take care of you and your family's finances.
1. Tackle your nominal spending
One of the greatest ways to become more financially secure is to increase your income by taking on more work and looking to start other income-generating streams. But it's a very difficult time to find extra work or start side hustles when many of us have already taken massive income losses. So it's become increasingly important to relook at our expenditure to see where we can make cuts.
Figuring out if you have a sensible spending ratio is a good marker of being overstretched or not. You should aim to have a spending ratio of around 70%. This will mean that you have a 30% percent buffer for savings, emergencies, and debt repayments. It's not a problem if you are not there yet but there are a few ways to reduce expenses for things that aren't that important to you so that you can reach a more comfortable and secure financial space.
Look at your digital, print, and media subscriptions. Check out your DSTV, Netflix, Showmax, and Amazon Prime usage. Maybe for a time, choose only one of these streaming services so that you can free up some cash monthly. You can also go through your print and software subscriptions and all other smaller categories of spending to decide if you are willing to cut back.
Better yet challenge yourself and your family and ditch TV altogether for a few months. Get creative at home and create your own book nook to spend more quality time with the family. Remember that making these cuts doesn't have to be permanent but it can be a great exercise to free up some money during this difficult season.
2. Resist the urge for takeaways and eat in
Ordering in is especially tempting now as restaurants and cafes are being opened up to the public again. You're not only saving on the inflated cost of takeaway food but also the tips and delivery fees added to your orders. Cooking at home and eating in is a great way to spend quality time with the family. You can even get the kids involved in meal prep. Of course, you will need some freezer space to store your homemade ready meals.
Meal planning and prepping meals in bulk can save a lot of time in the week and it can save a great deal on your grocery bill. Make sure to plan your family meals for the week noting down the groceries in a master list as you go along. When grocery shopping, make sure you stick to your list and avoid adding extras to your trolley. You've put in the hard work of planning your meals so try to avoid impulse buys.
Another tip is to keep it simple. Simple foods with less complex recipes are just as delicious and are cost-saving. Keeping it simple also helps with food wastage which can contribute a significant cost to your monthly budget. If you're looking for some new ideas for the kitchen check out our post on simple, nutritious, and affordable meals.
3. Examine your insurance policies
Shopping around for insurance can reap some interesting results and you may find that there are better deals for the same or similar cover. If you're stuck at home and driving less, your insurer may decrease your premium. Review your car and household contents policies and give your insurer a call. Don't be intimidated by asking for a better premium from your current provider. They may just surprise you with a lower rate.
Choosing the right insurance for you is highly dependent on your situation. Educate yourself and do the research but know that there are tools that can help you too. In a few minutes, a great comparison site like Hippo can give you several quotes so that you can make sure that you are getting the best deal.
There are also newer insurtech companies like Naked Insurance that use AI to decrease running costs and they offer significantly decreased rates compared to other insurers. Of course, do your homework and carefully read the policy wordings so that you can be confident that you are signing on to a policy that will give you the cover you need.
4. Check-in with your cell phone company and their competitors
Your cellphone contract is another way you can shop around and look for competitive quotes. Do you need as much data when you may be working at home most of the day? Are you making as many work calls? Consider decreasing your cellphone packages to save on unused data and airtime.
Maybe you're using more data and airtime than ever. There have been some drastic decreases in price on data packages in South Africa in the last year. Phone your cellphone provider and ask them if they can offer you a better deal per gigabyte or shop around and check out the competitor. Often if you find a better price you can phone up your current provider and they will match the competitor's deal. This way you can get a better deal and avoid the admin of changing providers.
5. Claim any money you're entitled to
Think about which of these you may be eligible for so that you can apply for these grants and claim for any insurance payouts:
- Unemployment Insurance Fund (UIF): Approach your employer about UIF should you have been retrenched or furloughed as this is the responsibility of the employer to submit and not the employee.
- Credit insurance and debt payment holidays: If you have debt make sure to find out if you have credit life insurance as some banks have been paying out for those who are unable to work due to Covid-19. You can also check with your banking institution if there are any payment holidays available for your credit card repayments so that you can free up some much-needed money. Just note that taking a payment holiday will require you to draw up an additional payment agreement with a new interest rate. So be sure to read the terms and conditions before signing on.
- SASSA grant: Check out the various grants available here.
- Small business development Covid-19 relief portal: Check out the application form here.
- Income protection cover: If you have an income protection policy and you have not been able to work because of lock-down there are a few policies that will payout. However many of these policies have very sticky policy wording and you may not be able to claim depending on your specific policy. It's worth a phone call to check though.
6. Sell your unwanted and unused items
Got any old technology, clothes, furniture, and appliances lying around? There are plenty of great online marketplaces to sell your little-used or unwanted items. If we're honest with ourselves many of us have made purchases over the years for some exciting new tech or appliance only to realise we didn't get to use as much as we thought we would. These are the kinds of things that we can sell to make some extra cash.
There's Facebook marketplace, OLX, Gumtree, and Junkmail which are all resale marketplaces. Facebook marketplace is a great platform to list your unwanted and unused things because it links to real profiles so that you can see who you are selling. Facebook marketplace feels more safe and secure because you have a reference point and some information about the people you are interacting with. There are also buy/sell groups on Facebook that are a great place to list your items for sale in your local neighbourhood.
If you're a bit weary of these sites there's nothing wrong with organizing an old fashioned car boot or yard sale in your neighbourhood as well. Just make sure to sanitize your sale items and socially distance when you meet up with your potential buyer.
We are all feeling the pressures of Covid-19 on our financial well being and to stick it out we are going to need to put in some hard work. Some of these tips might seem like they require a lot of effort and energy but it is well worth it when you can unlock some extra money each month and create a more secure future for you and your family.