In March this year, the annual inflation rate in South Africa rose to 5,9%. What is the inflation rate? Itâs basically a measure of how much more expensive things are getting. For example, if a quick trip to the corner store last year cost R100, that same shopping trip will now cost R105,90.
Most of us feel the effect of inflation in our daily lives. You might realise that your normal grocery budget isnât cutting it anymore, your fuel expenses are soaring, and you just canât seem to win financially.
Thatâs why itâs important to adjust your budget for inflation. Trying to keep the same budget with rising prices is like building a sandcastle at the waterâs edge as the tide comes in. At some point, you have to move away from the sea!
Hereâs how to do it.
If you fail to plan, you plan to fail
Planning is key to cutting costs and being budget-savvy. Letâs use fuel as an example. By planning ahead, you can save on fuel by driving when traffic isnât as hectic, going to the grocery store closest to your home or office, or making sure you only do one or two trips a day by writing down all your errands and plotting a strategic route.
In the grocery store, you can save by planning your meals ahead. This way you wonât stroll around looking for (expensive) dinner ideas, and you wonât resort to costly takeaways when youâre feeling tired after a long day.
Change the way you buy
Yes, we know you love that specific brand of coffee, but if you can save R10 by buying a cheaper brand, itâll go a long way in current circumstances. As economies adjust to the war in Ukraine, and with inflation at a 40-year high in America, prices are likely to keep rising.
Basics and non-perishables might be cheaper now than they will be in two months. Buy in bulk if you can and save on future costs. (Remember, this is planning, not panic buying⌠You donât need 126 rolls of toilet paper!)
Eliminate the weakest link
Itâs sad but true â some expenses will have to leave the building. Rethink your streaming subscriptions and other non-essential expenses, and take a good look at your insurance cover to see if you can reduce your premium. Learning to live more frugally might be what gets you through.
Review your budget monthly
Use the Budget screen on the 22seven app to compare categories and check the ones in which your spending has increased the most. (the ones hardest hit by inflation, in other words.) Check in every month so you can prepare yourself for the month to come, instead of being caught off guard when payday is still two weeks away.
Keep on investing
It might seem counterintuitive to put away some of your hard-earned money when youâre already anxious about cash flow, but investing will ultimately grow your wealth, even if it means that you have to sacrifice certain small pleasures right now.
If youâre only saving at the moment, have a serious look at investment options. Investing will help you beat inflation because long-term growth is significantly higher than what youâll get with a general savings account.
Donât stop swimming!
Just as you should keep putting money away, you should also keep paying off debts and contributing to your retirement. Yes, the tide might be lapping at your sandcastle, even though itâs built way back, and you might have to wade in and swim to keep things going. But keep focussed on your financial goals and youâll stay afloat. Youâve got this!