2021 was a financial nightmare for many South Africans as they battled the challenges of skyrocketing prices for electricity, food, and fuel. Unfortunately, the trend is set to continue through 2022 as fuel prices are scheduled to rise to a record-high this week and electricity tariffs will soon increase. Even if South Africans retain their jobs and receive an annual salary increase, one is left wondering if that is enough to keep up with the rising cost of living.
This week we share eight tips on how to maximize your money for 2022.
A SNAPSHOT OF 2021
Fuel:
Petrol increased by almost R6/litre from January to December 2021 and breached an all-time high of R20/litre.
Food:
A basket of everyday basic household groceries costs 6.3% in November 2021 compared to November 2020. Some items which incurred a drastic increase include cooking oil (27%), eggs (15%), beef (15%), and margarine (10%).
Electricity:
The National Energy Regulator of South Africa approved an Eskom electricity increase of 15.63% for 2021. That was the highest electricity price increase for the last decade in April 2021. It was also seven times more than the 2.20% increase in 2018 – not too long ago. Let's put the numbers into perspective; if you paid R1,000 for a set number of units in 2011 and used the same number of units in 2021, the cost would be R2,736.03.
Vehicles: Price increases pushed many new vehicles over the R300,000 price point in 2021.
WHAT'S ON THE CARDS FOR 2022?
Two significant price hikes are coming our way that will have a ripple effect on the cost of living in South Africa, namely a fuel and electricity price hike.
FUEL:
Fuel prices will go up by a record high again of more than one rand, and with the Ukraine invasion, South Africans are being told to brace themselves for more fuel increases in the weeks to come.
From the 2nd of March, both grades of petrol will increase by R1.46 a litre.
Diesel will go up by between R1.44 and R1.48 a litre.
This will have a ripple effect on food prices and other goods.
Economist Dale McKinley said that the fuel hike would hit consumers in many other ways. "Basic services - this is energy, water and other kinds of things that will generally begin to reflect that increase in price because of the running of machinery," McKinley said.
ELECTRICITY:
The National Energy Regulator of South Africa (Nersa) has approved a 9.6% tariff increase for Eskom for 2022/23. In a presentation on the 24th of February, the national energy regulator's chairperson Nhlanhla Gumede said this figure constitutes a 3.49% increase for the 2022/23 year, alongside legacy costs from previous years.
The price hikes will take the average electricity tariff in South Africa from just over R1.33 per kWh to around R1.46.
The increase will take effect from the 1st of April 2022 for Eskom customers. This is separate from the increase that municipal customers can expect to pay, which will take effect from the 1st of July 2022.
HOW TO MAXIMISE YOUR MONEY FOR 2022
Now, more than ever, it is important to plan ahead and compile a personal budget for 2022 if you want to keep your head above water. Below are some helpful tips on how to get the most value in eight areas where we commonly spend most of our income.
Vehicle:
Service your car at the recommended service intervals and do so at a reputable service center.
Regularly check your tyre pressure and wheel alignment.
Regularly check your water and oil levels.
Make use of loyalty programs offered by fuel stations and earn points for every litre of fuel you purchase.
Accelerate and stop gently and drive at a steady speed.
Grocery Shopping:
Avoid impulse buys
Do not shop while you are hungry.
Consider switching to less expensive brands and make a habit of comparing prices. Interestingly, the most profitable items are often packed at eye level.
Plan your meals in advance and create a shopping list dedicated to those meals. Only shop according to that list and avoid purchasing items you do not need.
Banking:
Do not use ATMs from other banks. Transact only with ATMs dedicated to your bank to save on withdrawal charges.
Try to increase your monthly repayments on your home loan and reduce the term and the amount of interest you pay.
Avoid drawing cash unnecessarily and use your bank statements to help determine your spending habits.
Choose the right bank account for your needs and limit your monthly bank charges.
Data:
Use Wi-Fi wherever possible from a secure and legitimate source.
Disable automatic app refreshing and only update your apps over Wi-Fi.
Always look for data-saving options on your phone.
Electricity:
Take short showers and don't run full baths.
Use colder water settings on your washing machine and dishwasher.
Choose energy-efficient or gas heaters in the winter.
Fit energy-saving light bulbs.
Turn down your geyser's thermostat.
Purchase your electricity in bulk once a month if you have a prepaid meter.
Health Care:
Check your medical aid plan to ensure it is relevant to your current needs and use any benefits, loyalty programs, and wellness plans.
If you have a fitness tracker, then connect it to your medical aid plan to earn wellness points.
Use hospitals and pharmacies in the approved network of your medical aid.
Use generic medication where possible.
Insurance
Review your short-term insurance annually and update your policy where necessary.
If you drive fewer kilometers than you used to because of working from home, find out if you are eligible for lower premiums.
Entertainment
Look at what you are paying for but no longer use, such as online subscriptions or gym memberships.
Cut back on takeaways and expensive dining.
Spend time in nature and use vouchers to enjoy special entertainment offers.
A PUSH IN THE RIGHT DIRECTION WITH A FINANCIAL ADVISOR
Examining your finances now and putting some realistic goals in place for 2022 will help you prepare for all the tariff hikes and inevitable financial challenges. The best way to achieve a financially secure future is to have a financial advisor in your corner to help you review the year.
Create a brighter, more prosperous future when you plan your finances properly. If you need assistance with financial planning and a realistic approach that works for you, then contact Wallstreet Financial Services.
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