Cape Town - It’s simple: if you’re not making ends meet, you need to either earn more, or spend less. Here’s how you might be able to do it.
That said, we have to consider that being ‘broke’ means such different things to different people. One person feels poor, because they can’t afford designer shoes, and another doesn’t have food to eat.
For the purposes of this article we will assume that you are somewhere in the middle: employed (if overworked and underpaid) and not destitute, but struggling to meet your obligations, and also to have a life.
Many people who tell you how to stick to your budget, cut out luxuries and avoid debt, have possibly never had real financial problems in their lives. The kind of financial problems that keep you awake and give you visions of camping out in your parents’ garage – if you’re lucky enough to have parents with an empty garage, that is.
In the real world geysers explode, your mom suddenly needs medical care, your kid needs money for a school trip, the car packs up – all in the same week. It is always easy to be wise after the fact, but not everyone is able to pay insurance premiums, afford a full medical scheme, save lots of money (for a crisis and retirement), simply because they are not making ends meet right now.
What with rent, or bond repayments, car payments, electricity, school fees, petrol, food (to name but a few) balancing your budget can sometimes be a bit like trying to do a tightrope walk between two high buildings with no safety net.
Many South Africans are not in trouble because of spending money on luxuries, but because the cost of living is so high, and salaries have lagged behind in the last few years. You could well be one of them.
Here are some tips on spending less and possibly making a bit of money:
Rent out space. If you have an extra room in the house and you live in an area where there are lots of tourists or students, you could get a nice extra income in this way. Investigate where you can either rent out an entire place, or a room (bathroom shared with owners) a shared room, or even just the couch in your living room (Yes, people do this.) Obviously the prices will vary according to the area and the facilities. Tourists come and go, so you will not have to endure a permanent invasion of your space, such as when you permanently rent out a room.
Give time instead of gifts. Can’t afford to buy a family member or a friend an expensive present for their birthday? You can still give them something special. Make vouchers in which you offer your services (babysitting, dishwashing, a lift to work, or to the doctor, an offer to do grocery shopping) and put these in a home-made card. It will probably be appreciated a lot more than a shop-bought gift.
Re-evaluate your insurance. The replacement value of your car drops annually, and so should your monthly insurance payments. Also specify which items you want insured in the contents of your home (electronic goods, cameras, computers, jewellery). You could be paying a fortune on the replacement value of things that are unlikely to be stolen, such as books, or a piano. There is of course the chance of fire and flood damage, but if money’s tight, you might have to make certain hard choices. And in SA, you are far more likely to have a burglary than anything else. If you have to choose between having no insurance or only insurance on the things that are most likely to be stolen, I know which one I would take.
Medical cover. If you are young and healthy, a decent hospital plan should cover you for the potentially most crippling medical crises. And remember that hospital plans also cover chronic medication for 26 specified chronic conditions. Medical scheme contributions are high, and what with benefits being cut consistently in the last few years, even with a full medical scheme you can find yourself having to cover quite a bit of your day-to-day medical expenses. By all means downscale, but make sure you do have a real hospital plan. Hospital cash-back plans could leave you with huge medical bills.
Downscale. Whatever you might think, your worth as a person is not measured in your possessions. Move to a smaller house or flat in a cheaper area if you have to, sell the new car and buy a secondhand one, or a scooter, and cancel the expensive holiday. No earthly possession is worth losing sleep over. By the same token, you don’t really need expensive restaurant meals and designer clothing. They are nothing more than nice-to-haves, and certainly not essential.
Join a lift club. It’s not always convenient to have to travel at set times with others, but it could cut your transport costs by as much as 75%, depending on how many people are in the lift club and how far you are travelling.
Sell stuff you don’t need in Gumtree/OLX. What you think of as useless clutter, may be a treasure for someone else. It’s free to advertise on these sites. If you haven’t used something in six months, you are unlikely to do so in the future. Sell it for ready cash. Books, clothes, electronic equipment, furniture stacked in the garage, gardening equipment, the old TV. Turn your clutter into cash.
Buy second hand stuff. Buying anything new is expensive. Things such as washing machines, vacuum cleaners, TVs, curtains and furniture can be found in the classifieds at a fraction of the price. Just make sure they work before you cart them off. You don’t want to buy problems.
Move in with a friend. Living on your own is hellishly expensive as there’s no sharing of bills. It all has to come out of your pocket. So what if you have to slum it for a while – it’s better than having stuff repossessed or spending another sleepless night worrying about being blacklisted.
Don’t go the loan shark route. OK, I know sometimes one is desperate, but once you’re in this spiral it’s almost impossible to get out of it. If you’re working, rather try to get a personal loan from the bank, as the interest rates will be much lower. Or ask a friend or family member – which you can only do if you don’t still owe them money from last time. A loan shark might solve your problem for today, but could create a much bigger one for tomorrow. The same can be true for credit cards.
Freelance on the side. Use whatever skills you have to make extra money on the side if your boss won’t give you an increase. These could include doing translations, overseeing minor building projects, handyman work, babysitting, pool cleaning – in short, whatever you have to offer that might be in demand after hours (something legal!). A second job is always an option, but not always practical in a country where so many people are struggling to find one to begin with.
Rediscover home entertainment. A fancy night out can set you back hundreds (or thousands, depending on your tastes.) DVDs, a bring-and-braai with friends, an evening of card games – all of these can allow you to have some fun for a fraction of what a night out on the town would cost you. Don’t be shy to tell friends you’re trying to save money.
Hunt for bargains on the internet. Shop around here and check for specials from big chain stores before you get into your car and spend petrol money. Remember a bargain is only a bargain if you would have paid the full price for it anyway.
Make do with what you have. Fix what you have rather than replace it with new things. Have faded clothing dyed, get a reasonable handyman to fix broken appliances, paint your old furniture. Use your imagination rather than shelling out money unnecessarily for new stuff while there is still plenty of life left in the stuff you already have.
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