How to Reduce your Living Expenses
The past few years have forced South Africans to rethink their finances and reduce their living expenses.
The COVID-19 pandemic led to several retrenchments and business closures, and the 2021 looting destroyed many businesses.
Many families have tried cutting down where they can but this isn't always as easy as it seems. Overanalysing every cent that you spend is difficult if you only have a few cents to spend in the first place. It is not only those in tough financial positions that are struggling to make ends meet. People with steady incomes also spend large chunks of their salaries on debt every month.
According to statistics, the average South African spent 75% of their salary on debt in 2021. This percentage is said to increase to 77% in 2022. This leaves them with very little of their own income to pay off debt or put into a savings account.
It is no secret that life is getting more and more expensive and it seems as if salaries are just not enough to sustain a comfortable life.
How, then, can you reduce your living expenses? Here are a few helpful tips.
1) Create a budget
The first step to saving money is being in control of your income and expenses. A budget will help you determine how much money is going in and how much money is going out.
List your income as well as the necessary payments that you have to make every month. Then determine how much extra money you have at the end of the month.
Some of the money that you have leftover should be put into a savings account for emergencies.
You can also use some of it to pay off credit card debt, depending on how much you have left.
After you have determined these amounts, you are left with money that you can spend on whatever you decide during the month.
2) Cut back on your minor expenses
After you have set up your budget, try to find any unnecessary expenses you might not need.
If you aren't big on movies or series, you probably don't need three streaming services, for example.
Perhaps you have a gym contract but you only go about twice a week. Maybe it is time to cancel it and start doing exercises at home.
You can also opt for cheaper cell phone contracts and internet providers.
Even though these might be small amounts, it all adds up over the year. This is money that you could be adding to your savings account or using to pay off debt.
See also: 5 Tips For Landlords During Difficult Times
3) Look at your major expenses
Cutting back on your major expenses might not be as easy as cutting back on minor expenses because these often include things we need.
Things like a house and a car are necessary for families and people who have to travel for work.
If your mortgage is syphoning most of your salary, then maybe it's time to move to a smaller house or a different part of town.
Downsizing has solved many homeowners' financial woes without them having to compromise their lifestyle too much.
This can also be the case for your car. If you buy a smaller fuel-efficient car, then you'll save on your instalments as well as your petrol expenses every month.
4) Be savvy when going shopping
How many times have you gone shopping and you end up buying things you want but don't really need?
It happens to the best of us.
But if you are serious about making some changes, then start by going to the shop with a list of necessities.
Know what you are looking for and stick to that. You can also look out for coupons and discount codes, join a rewards program, or shop on days when you know stores will have specials.
Research your prices before you go and choose the shop that is the cheapest option.
See also: Affording a Home on a Single Income
5) Save money on household expenses
Sometimes we waste money at home without realizing we are doing it.
These are small things that have become part of our daily lives so it is important to make a conscious effort to stop doing them.
The next time you leave a room, switch off the lights. Leaving unnecessary lights on contributes to your electricity bill at the end of the month.
You can also change to energy-efficient light bulbs and this way you are also putting less pressure on the environment (and Eskom for that matter!).
Other things you can do is cook food in bulk and put the leftovers in the freezer, declutter your home and sell items to thrift stores, and eat at home rather than eating out.
Final thoughts
Reducing your living expenses is easy if you have a firm grasp on your finances and you know where your money is going every month.
There are many ways that you can save and cut back on unnecessary expenses.
With the money that you save you can pay off debt faster and you can put some away for a rainy day.
Taking control of your money matters will only empower you to reach your financial goals.
Article by ImmoAfrica.net