By: Jo-Anne Bailey, Director & Country Manager for Franklin Templeton Investments
The former minister of finance, Malusi Gigaba, had announced during his budget speech that South Africa will see its first VAT increase in 25 years from 14% to 15%.
With the 1% VAT increase in full swing, consumers may need to tighten their belts and become a bit more prudent with their money.
Although experts have cited that the increase will boost the South African economy, consumers will need to look at ways to decrease unnecessary expenditure and look at ways save their money in a savvy way.
Below Jo-Anne Bailey, Director & Country Manager for Franklin Templeton Investments offers a few simple saving tips that will help consumers use their money wisely
1. Spend what is left after saving rather than save what is left after spending – This is one of Warren Buffet’s famous quotes and a good starting point to saving more. In order to do this, start documenting your income and expense details to calculate monthly saving. This way you know exactly how much you save and can also pin point some expenses which can be cut down further.
2. Control online spends – There is an online retail explosion in the South Africa. Most of us are guilty, finding it difficult to not take advantage of the convenience and discounts of online purchases. But while convenient, online buying can result in more impulsive purchases – i.e. buying stuff you don’t actually need! To help curb this in 2017, ask yourself these questions before your next online purchase:
i) Is it an impulsive buy just because there is a discount?
ii) How often are you going to use the new product?
iii) Is life going to change much if you decide to postpone the purchase?
Your answers will help you to go ahead with the purchase or not.
3. Pay off your expensive loans – Out of your liabilities, check those that carry a higher interest rate like credit card dues, personal loans, etc. and pay them off first. Paying things off quicker means you’ll save on the interest fees.
4. Save on vehicle insurance – Many people don’t revise their car insurance policy’s each year, but when your car gets older its value decreases, which means you should be saving on insurance, not getting a premium increase. Check with your insurer or get new quotes from others. Every little saving helps.
5. Consider joining a car pool club – With the recent budget announcements, the General Fuel Levy was increased by 22 cents, this increase will make a considerable difference to your expenses. Joining a car pool club will bring down expenses as you can share the fuel expenses with the people you travel with.
6. Check out various tax saving options – Explore various other sections which may allow you to save more taxes. Some companies offer flexible salary structures to save taxes. Any tax saved can add to your savings kitty.
Once you’ve cut down spending and increased your saving potential, it is then important to deploy these savings in inflation beating investment avenues. A mutual fund investment is one such avenue that will help you to achieve long term goals through consistent, disciplined investing.