Cutting back on luxuries to stay financially afloat is not only a smart move, but a necessary one, according to one financial expert.
"Limiting expenditure on luxuries can result in huge savings," John Manyike, the head of financial education at Old Mutual, told HuffPost.
"For example, if you normally spend R2,000 on entertainment every month, choosing cheaper entertainment options or foregoing one or two events can leave you with a few hundred in your bank account, which can then be used to supplement other financial needs."
This is a trend that was also observed in 2017.
Holidays, alcohol and entertainment were some of the top luxuries South Africans cut back on, as revealed by Old Mutual's Savings and Investment Monitor for 2017. Clothing, hair and beauty, and cellphone airtime also made the top 10 list of items consumers cut back on last year.
However, even if you're not a luxurious person, said Manyike, the smallest of changes can make a difference to your budget if you're financially stressed. This can be done through, for example:
- Setting a limit for birthday gifts
Don't go big if you can't afford to, and don't go into debt for a gift.
- Packing lunch at home
It's proven to be cheaper to make your own lunch at home — or have supper leftovers — than to buy lunch from your office's canteen.
- Cancelling unnecessary subscriptions
These may be magazine and newspaper subscriptions, or even gym membership, if you joined but never go. You can also downgrade your satellite television subscription, keeping a bouquet with only the important channels.
- Reusing plastic bags
Save and reuse bags when you go shopping to avoid adding an extra 50c to R1 for each plastic bag every time you shop. It may seem small, but it adds up in the long run.
"With the VAT increase this year and repeated fuel hikes, consumers will likely still face a tough financial year," Manyike said, "prompting some to cut back even further."
Manyike advised consumers not to dip into their investments until they've tried their best to reduce day-to-day living expenses, especially luxuries. He expressed concern that fewer and fewer South African parents are saving for their children's education, with 18 percent of respondents in Old Mutual's survey last year indicating that their children's education is a category they were cutting back on.
"And I know that's sometimes a difficult balance to strike when you're financially hard-pressed. You may dip into your savings thinking you'll just give it back, but that's hardly the case, as needs normally pile on."