Staying informed, planning, and seeking expert advice, can help secure your financial future

Power utility Eskom’s 12.7% electricity increase approved by the National Energy Regulator of SA came into effect on Tuesday. If the budget is passed on Wednesday, a 0.5 percentage point VAT increase announced by finance minister Enoch Godongwana last month will also come into effect on May 1. Municipalities will also implement  tariff hikes from July 1.

This means more money leaving your account to keep the lights on, among other things.

The good news for motorists is that the Central Energy Fund estimates that 95 unleaded petrol is due for a price cut of 95c per litre, while the wholesale price of diesel could be lowered by between 91c and 95c a litre.

However, this does not mean commuters will pay less for their trips.

The Pietermaritzburg Economic Justice & Dignity Group in its latest Household Affordability Index report shows that the cost of the average household food basket decreased by R120.48 (2,2%) from R5,433.70 in January to R5,313.22 in February.

However, economists have warned that if the proposed VAT hike is implemented, this will drive up the prices of essential goods, adding strain to already struggling households.

As we’re forced to look at cost-cutting measures, some of these, like cancelling insurance policies, may leave us vulnerable.

“With the cost of living climbing, small but smart adjustments to everyday expenses can make a big difference in maintaining financial stability," says Leruo Malumo, Santam’s head of product strategy, development and governance.

"Finding ways to cut down expenses can be a financially empowering exercise, but it’s crucial to ensure the cuts you make today won’t result in costly consequences down the line.

When it’s time to trim excess expenses, common targets are purchases such as insurance and, like the concerns about early withdrawals from the two-pot system, there is a future cost that’s not being taken into consideration. Instead of cancelling insurance to cut costs, review your policies with a financial adviser to ensure you’re not over- or underinsured.”

Sharon Hamman, Momentum’s senior legal adviser, highlights a recent Financial Sector Conduct Authority survey, which found that “only 51% of South Africans are financially literate by definition”, adding that this paves the way for financial insecurity.

“Without financial knowledge and the right foundations in place, many South Africans remain vulnerable to economic hardships that can strip them of opportunities and stability. Financial security is not a privilege, but a right we should all be fighting fo. Economic realities are constantly shifting, and financial security doesn’t happen by chance.

It requires planning, preparation, and the right mindset. Financial illiteracy hampers financial stability and progress, adding to inequality, not just for the current generation but also for those who follow.

“Financial illiteracy has a domino effect — limiting access to education, healthcare, and basic needs. We can take control by advocating for financial literacy, taking responsibility for our knowledge levels by reading and asking the right questions, and by making a conscious effort to upskill ourselves to allow us to make informed decisions that protect our financial future.”

Hamman says staying informed, planning, and seeking expert advice can help secure your financial future.

Hamman shares 10 ways to financial security:

Prioritise essential spending: Cut back on non-essential expenses to ensure financial flexibility. If your income is uncertain, adopt an essentials-only budget and renegotiate fixed costs like phone and internet contracts.

Adjust your budget for inflation: Rising prices affect everyone. Stay ahead by tracking your spending and making necessary budget adjustments to maintain stability.

Reduce or settle high-interest-bearing debt: Be smart about debt. Credit cards are great for short-term debt, as no interest is generally payable in the first 30 days but, thereafter, it becomes very expensive. Consolidate debt where possible, using interest-efficient finance options. If interest rates drop, maintain your current repayment amounts to pay off debt faster.

Avoid lifestyle inflation: Now is not the time to take on unnecessary financial burdens like a bigger home or a new car. Keeping fixed costs low makes it easier to adapt to economic changes.

Build and protect your emergency fund: Aim to save at least three to six months’ expenses in a high-interest-bearing savings account. If you’re self-employed or have an unpredictable income, consider saving even more.

Stay invested – don’t panic-sell: Short-term market movements should not derail long-term investments. Staying invested ensures you benefit from future recoveries and wealth growth.

Diversify your investments: A well-diversified portfolio protects you against market volatility. If you’re unsure how to adjust your investments, consult a financial adviser.

Be mindful of tax implications: Understand how changing tax regulations, such as SA’s two-pot retirement system, affect your financial future before making investment or withdrawal decisions.

Get your will in order: A secure financial legacy includes protecting your loved ones. Having a valid, executable, up-to-date will with a reputable executor prevents legal complications and ensures your assets are distributed according to your wishes.

Take advantage of financial advice: Financial security isn’t just about saving money; it’s about making the right financial decisions. A licensed financial adviser can help you optimise your financial position, no matter what the future holds.

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