Everyone is worried about the rising costs of food, gas, and utilities, but sub-Saharan Africa is bearing the brunt of the price hike. Prices have skyrocketed as a result of a domino effect, including the COVID-19 pandemic’s disruption of the supply chain, and climatic disasters that have led to food instability, and energy shortages.
According to Numbeo, the biggest database on costs of living in the world, South Africa has the highest cost of living in southern Africa when considering food, transportation, utilities, and restaurants, and it ranks tenth in Africa overall. Côte d’Ivoire, Senegal, Ethiopia, Mozambique, and Mauritius round out the top five African countries in terms of cost of living, according to the ranking.
Due to the high cost of food, consumers have resorted to meal planning or purchasing in bulk to cut costs. Knorr, a division of Unilever, discovered that the typical South African eats two meals throughout the week and skips breakfast altogether, eating only breakfast on weekends.
Understanding how consumers utilize their resources to solve economic issues, including the cost-of-living crisis, has been a significant focus of ours after years of researching personal finance and development finance. Be frugal and make plans for how you will stay financially afloat when circumstances are rough.
Understanding how to deal with the cost-of-living dilemma is critical, whether it’s through paying off debt, saving strategically, or keeping tabs on the costs that eat up a large portion of your income. You may greatly improve your financial situation by always searching for ways to save more money or spend less.
Please do not rely on this as a substitute for professional financial counsel; everyone’s circumstances are unique. Get in touch with a licensed financial service provider whenever possible. People who have steady incomes and access to financial services may be the only ones who can benefit from some of these recommendations. We outline three factors to think about while dealing with the cost-of-living issue, bearing these caveats in mind.
1. Get All of Your Bills in One Place
Find out where you’re spending money twice. Bank fees are a prime example. The likelihood of incurring different bank fees for identical transactions increases if you maintain accounts with more than one financial institution. You can save money on bank fees by keeping all of your money in one place.
Streaming service subscriptions are another illustration. Ask yourself this: out of all the accounts you have for services like Showmax, AppleTV, YouTube Premium, and Netflix, how many do you use? The total amount of all the fees is quite substantial. “Beware of little expenses,” said Benjamin Franklin, a former US senator. It only takes a little leak to bring down a magnificent ship.
2. Pay Off Your Debt
According to Nedbank’s Financial Health Report, over half of South Africans think it’s OK to take out loans to pay for necessities like food, clothes, furniture, appliances, power, and water, all of which have increased in debt due to the cost-of-living problem. As a result of rising inflation, people are also borrowing money to pay for day-to-day needs in Nigeria.
You might quickly fall further into debt if you take on additional debt when living expenses are going up. Instead, you should prioritize paying off your debts so that you can eventually have more cash on hand. You can either try the debt avalanche method or the debt snowball approach.
Paying off smaller debts before tackling larger ones is the goal of the debt snowball method. Feeling the weight of your debt melt away is a natural motivator. When you use the debt avalanche strategy, you pay off your highest interest bills first, which means you save the most money in the long run. Consult a qualified financial counselor, regardless of the strategy you choose.
3. Divide Your Money Into Different Accounts
An emergency fund and peace of mind are two benefits of saving. It also aids in the accomplishment of your monetary objectives. Although households with inconsistent income may find it more challenging to accumulate savings, there are ways to cut costs when shopping, such as purchasing refills for household cleaning goods or switching to cheaper supermarket brands.
The majority of savers tend to keep all of their money in one place, whether it’s for vacations, emergencies, future purchases, or long-term objectives. You can’t see which portion of your money you’re taking out when you need to make a withdrawal using this method.
Classifying your savings according to their intended use is one approach to keeping them organized. A spreadsheet that breaks out your savings by category would be ideal for this. When you can observe the progress of your savings for each objective, it motivates you to maintain the current rate of savings.
Taking it a step further, budgeting applications like 22seven may generate unique spending plans according to your real habits. You can monitor your spending and establish spending restrictions with this free software.
You can set a limit on how much you’re willing to spend on things like eating out and shopping, and then get a warning when you’re about to go over it. However, after those funds are gone, you need to exercise restraint and not squander them all at once. If you’re worried about installing yet another app, consider how easy it is to use your debit card while you’re out and about and end up paying more than you intended. There are times when we have to protect ourselves from our actions, and this is one of those instances.
