Tough times are ahead for South Africans as the Budget Speech presented by Finance Minister Tito Mboweni is reflected upon. The Minister presented some of the real realities facing the country – as the economic image which emerged from #Budget2019 was not as positive as many had hoped and the risks raised last year during the mid-term Budget in October are fast materialising.
It is obvious each year that aspects like sin tax will go up, but with the tough economic times – the entire country is affected, whether you are a so called ‘sinner or saint’. The country is seen to be spending a larger margin than tax that has been collected in the previous year, which has resulted in the need to borrow around R1.2 billion a day. We are however all aware that borrowing money does not come cheap.
Additionally, with fuel levies announced to go up by 29 cent per litre for petrol and 30 cents per litre for diesel, consumers need to be cognisant of the fact that this not only affects your pocket every time you fill up your fuel tanks, but it will also affect you indirectly through the rising cost of goods. Goods which include food and consumables are transported by road -this means that the transport costs for these are going to increase noticeably and the impact of this will be transferred to consumers.
So, what can we all do to try and alleviate the tough road ahead, given various increases in the cost of living for 2019?
• It is imperative for you to be aware of your financial situation. You may need to start by setting up a budget to give you a full and true view of your financial position. What do you really spend each month, not only on necessities, but other luxuries like take-out food, going out and entertaining at home etc.?
• You need to start to consider your income vs. deductions vs. living expenses. This will assist you in establishing what you have remaining, once all your payments have been made.
• Once you have this view, the key to getting through tough times, is to start getting rid of your debt, if you have any, even if it’s just a small monthly payment, every little bit will help. Additionally, undertaking this ‘reviewing of your finances’ exercise will also help you see where you need to make necessary cuts on expenses. This will also assist you in having cash flow to support the increases to aspects like fuel. So, ask yourself, do you really need your gym membership, or can you join a Parkrun, as an example, which is not only sociable, but free?
• Save, save and save – if you are in a situation where you can pay off any debts, cost cut unnecessary items and have some remaining funds to get you through, you should also consider saving such funds.
Yes, of course sin taxes are going up again! This remains predictable as you will be paying more for tobacco and alcohol, as it is expected to assist – along with other tax changes – to bring in an additional R15 billion in revenue in the 2019/20 financial year. Friday sundowner drinks with colleagues and/or friends may have to be reduced to once a month. Currently, the entire country is feeling the economic pressures, so it is important to curb your spending and change your lifestyle expenses.
As alcohol, cigarettes and other tobacco products become a lot more expensive, perhaps now is also the time to make lifestyle choices that not only help your budget but could possibly benefit your health at the same time.
South Africa is a consumption driven society with a large number of people living above their means. A spirit of change is needed to curb the excessive spending and impact certain tax increases will have as the country reflects on #Budget2019 – as there is likely to be a lot more economic pain over the next few years. Even a small change can make a difference.