How to manage your money amid rising living expenses

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JIMMY MOYAHA: With everything happening in the geopolitical landscape globally, it has left South Africans very confused around some of the impacts that these geopolitical developments will have on their own local situations and local markets.

We’re going to be taking a look at this in a bit more detail and trying to understand how South Africans can better navigate their day-to-day finances as we battle all of these uncertainties.

I’m joined on the line by a programme manager for financial education at Old Mutual, Thabo Hollo, to take a look at this and see what to make of it. Thabo, lovely having you on the show. Thanks so much for taking the time.

Let’s start perhaps with some of the impact that we are seeing on South African consumers from a day-to-day perspective. I imagine some of the things that we’re seeing, like the sharp increases in petrol prices, all of that is tied to global events, but consumers feel it in a local sense.

THABO HOLLO: Absolutely, and thanks for the opportunity, Jimmy. I’ll give you my personal anecdote. I drove at some point down to Limpopo and the diesel price was R18 [per litre] or so, and I spent the weekend there. When I came back, the diesel price had gone up to R27, so you can imagine that I did not plan for it.

My plan was very specific in terms of how much I was going to spend driving there and how much it was going to cost me coming back.

You can imagine – we’re spending a whole lot of our money on transport, we’re spending money on food generally as consumers in South Africa – so you can imagine that shift, that seismic shift, and the impact it has on our pockets.

Remember, I did not receive any salary increase in between that. So you can imagine the squeeze that I’m feeling.

Generally, that’s what South Africans are feeling at the moment. So that increase in fuel price, it’s a massive, massive knock on our pockets, and then the subsequent inflation that is associated with that in terms of food in particular, that is the challenge that we’re facing at the moment.

JIMMY MOYAHA: Thabo, let’s get into that in a bit more detail. The inflation conversation, the interest rate conversation. There’s a Monetary Policy Committee meeting that is taking place from our local central bank. We are expecting a rate hike from there. I want to get a sense of those pressures compounding and adding to what consumers are currently facing.

THABO HOLLO: Unfortunately, the bulk of us as consumers are still sitting with a whole lot of debt, whether it’s personal loans, credit cards, car loans, or home loans, and all of those have a bearing on our pockets as things stand.

So you can only imagine if the interest rate goes up – and we do expect that the interest rate will be increased – how much pressure it’s going to put on our pockets at the moment.

When they told us to tighten our belts, I think we’ve run out of holes on our belts as it is.

So yes, there’s going to be inflationary pressure in terms of food inflation in particular.

We expect that there will be inflation. In fact, some taxi associations are already talking about a 10% increase in fare prices. So you can imagine how much of a knock that is going to make in terms of our pockets.

So you’re looking at interest rates by themselves in terms of our lending habits at the moment. You’re looking at food inflation. You’re looking at inflation on transport. So as it is, we are under massive, massive pressure.

But with that comes opportunities to relook at how we can navigate ourselves around this.

JIMMY MOYAHA: I don’t think South African consumers at this point have any space left on the belt at all, let alone the loops and the holes in the belt. I don’t know if there’s much of a belt left.

Before I let you go and take a look at what you mentioned around navigating these difficult times, how do we start to think about things differently as consumers, as those who are needing to manage our finances in a world where the cost of living is entirely out of our control and we’re having some of these costs imposed on us?

How do you start to think about your finances differently and manage those differently?

THABO HOLLO: The first thing, and yes, you’re absolutely correct, the state of the economy is outside our control. But we need to control what is within our span of control. We must cut our coat according to our cloth. We have to review the way we do things.

Firstly, let’s relook at our budgets and see what is sitting in our personal and household budgets.

What are the things that we cannot do without? What are the things that are luxurious that we can do without? There are certain decisions that, unfortunately, we have to delay.

If you were planning, for instance, on taking more debt to finance things like consumable goods and so on, this is an opportune time to pause a little bit and reflect and say, ‘do I absolutely have to take on this debt’?

That’s the other thing. We tend to be frivolous in terms of our spend.

We cannot have this month-end millionaire behaviour, where we go out and splurge at the end of the month, and then the rest of the month we are pulling hard.

We’ve got to relook at how we behave in terms of our finances.

But the one thing that I want to leave the listeners with, Jimmy, is we need to go back into our bank statements and see what is sitting [there]. What are the transactions that we could do without?

Some of us are sitting with subscriptions that we hardly ever use, gym memberships that we hardly ever use. We’re sitting with online platforms that we’ve subscribed to that we don’t use.

This is an opportune time to start … taking a microscopic look at our finances … That’s the only thing.

We can only control our own finances, unfortunately. We cannot control the economy at the moment, so let’s go out there and tighten the belt a little bit more.

I know it’s hard, but let’s do it a little bit more.

JIMMY MOYAHA: Navigating these uncertain times and approaching this with the fiscal responsibility required to survive these uncertainties, that is how we get through these trying times.

That is how we navigate increasing inflation, increasing geopolitical tensions, and the ever-increasing cost of living. We’ll leave the conversation on that note.

Thanks so much to the programme director for financial education at Old Mutual, Thabo Hollo, for joining us to take a look at how to navigate these uncertain times.

This interview was brought to you by Old Mutual driving the conversation on SME growth and solutions to youth unemployment in South Africa.

Moneyweb does not endorse any product or service being advertised in sponsored articles on our platform.

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