Picture the scene: you’re grocery shopping and the prices of your usual groceries have increased yet again. Unfortunately, inflation is to blame, as usual.
In South Africa, consumer price inflation is currently up 5.9% year-on-year as of March 2022! This is the highest inflation that we’ve experienced in the last five years. Simply put, it means that the price of goods (e.g. groceries) is 5% higher this year compared to 2021. But why does this happen?
How inflation works
Inflation is when there’s a change in the price of goods and services, and it’s usually calculated by the government. Here are some things that may impact inflation:
- an increase in supply and demand for certain products
- an increase in the cost of materials used to make goods
- an increase in production costs
- an increase in the price of goods (end product) – this could be food, clothing, transport, etc.
Manage your budget to beat inflation
The inflation rate can take quite a chunk from your budget, but there are a few smart ways to work around it. Use these tips to get started:
Negotiate lower interest rates
If you have any existing loans, credit cards or even store credit, chat to your credit providers to negotiate the debt’s interest rate. A lower interest rate will help decrease the repayment amounts. This means you’ll have more money available when inflation prices loom.
Review your insurance
Do an audit of all the insurances you have – car, life, medical, etc. – including the costs and what they cover. You may be paying too much. Based on what you learn, shop around for other affordable options, like Budget Insurance! Learn more about our options here.
Do an audit of your expenses
Make a list of all your expenses, including debit orders. Compare it to a bank statement and assess whether you’re overspending. For example, you may notice that you spend too much money on unplanned takeaways or new clothing monthly. Once you’ve identified ways to save, redo your budget, then stick to it.
Consider refinancing your home loan
If your repayments and interest on your home loan are hefty, you could consider applying for refinancing. Refinancing means you’d swap the terms of your old loan for new ones, based on the current value of your home and not the previous value. If this is successful, you’re likely to have a lower monthly instalment. Chat to a financial adviser to decide if this is a good decision for you.
Find more tips in these blog articles:
The information in this article is for information purposes only and does not constitute professional advice.