Keeping afloat in a tough financial environment

With the cost of living continually increasing, South Africans are under rising pressure to make ends meet.

We consider ways to bring in extra cash, cut back costs, and consolidate debt in a tough and unpredictable economic environment.

Tip: If you’re not able to meet your debt obligations, consider debt consolidation.

Simple and effective ways to bring in extra cash

A simple side hustle, or even a cherished hobby, has great potential to grow into a profitable business.

Farzana Botha, segment solutions manager at Sanlam Risk and Savings, tells the story of a young working mother who recently lost her husband. This lady was left with a bond to pay, the debt her husband had incurred, and two young children to raise.

Despite her dire situation, Botha explains, the young widow was able to create a steady income stream.

“She subdivided her home with a view to renting out part of it to female students. The plan was to pay off her bond, and other debt, pronto,” Botha says.

In addition to the money she received from rent, one of the widow’s tenants was keen to earn extra money, and babysat her children for a small fee. This greatly reduced her childcare expenses.

Other ways of generating income can include:

Renting out office space. If you have your own office and space to spare, explore the option of renting out a portion to a working individual during the week.

Selling unwanted goods. Take stock of your household items and sell your unwanted goods on Gumtree or Facebook Marketplace. It’s important to note that there is also a market for old and broken electronic devices, such as laptops and cell phones.

Walking dogs. Ask your friends and neighbours who have dogs if they’d consider this service. Dog walking services are becoming increasingly popular among dog owners who work long hours.

Small changes can lead to big savings

Botha points to digital grocery services as a savings opportunity. “Online shopping is a winner, as it reduces fuel and parking costs and prevents you falling prey to the temptations inside a mall.”

Comparing prices can also be done easily on digital platforms. Payday and Black Friday specials can also work in your favour.

No one can feign ignorance when it comes to the price of takeaway coffees and lunches during the workweek. Buying one coffee five times a week for a year can add up to R7,200. Botha does not advise cutting this convenience out completely. Rather, she suggests halving the amount, and alternating with food and drink brought from home.

“The money you save can then be stashed into a high-interest money market or call account, which we all should have in place,” she says.

Other small changes that can lead to big savings include:

• Cutting back on your “comfort spends”. These can include an expensive bottle of wine or a weekly foot massage. Make a list of your luxuries and see where you can cut back.
• Cancelling subscriptions. If you have more than one magazine, journal, or streaming subscription, consider which ones you can live without.
• Paying your bills on time. Ensure your bills are paid on time to avoid accruing interest and penalties.
• Buying second-hand goods. Items can include furniture, baby and toddler resources, children’s toys, and electrical appliances.

Pay off your debt – but not to the detriment of your basic needs

Botha says that paying off debt should be a top priority, but only if this can be done without putting your basic needs in jeopardy.

“You shouldn’t become a slave to your debt, paying in every last cent and then struggling to make ends meet,” she says.

When this happens, Botha explains, it’s tempting to find ways to access more funds, and in the process incur more debt. She advises making a list instead, identifying high-interest items, and paying them off as efficiently as possible.

“We have control over our spending behaviour, how we manage our debt, and how we allocate our money,” Botha concludes. “If you’re in any doubt, partner with a reputable financial adviser so that you are equipped to navigate these tough times more than successfully.”

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