Budgets are bound to get tighter in months to come what with the effects of the COVID-19 pandemic on the local, and global, economy. The South African Reserve estimates that the country’s GDP shrunk by 32.6% during the initial five-week lockdown and that the economy will contract by 7% in 2020.
Insurance is often the first expense to go when times get tough, mostly because it contributes to a large percentage of household expenditure. However, it plays an exceptionally vital role in protecting the financial future of your family, and is a necessary expense rather than a nice-to have at a time like this.

First things first, draw up a monthly budget rather than keeping a rough mental breakdown – use an app, if it’ll help.

Evaluate your spending habits by analysing the last three months of your bank statements, so that you can see where you spend the most, and to help you separate your essential and non-essential expenses. The average South African family spends around 40% of its household expenditure on non-essential products and services, according to the Living Conditions of Households in South Africa2 report by Stats SA.

That’s the place to start. Here’s a practical, belt-tightening guide of how you can save money, so that’s there’s enough for those ever important expenses that you really can’t go without.

1 | A second interest rate cut

Many South African expressed a sigh of relief as the interest rate has been cut to its lowest record in decades. The repo rate now stands at 3.75%, which brings the prime interest rate to 7.25%, making it cheaper to pay off your bond.

The Monetary Policy Committee of the Reserve Bank will meet again in the third week of July 2020 to review interest rates.

South Africans will save R1 581 per month on a R1-million bond; R3 162 per month on a R2-million bond; and R4 745 on a R3-million bond.

Monthly savings from R1 581 on a R1-million bond.

2 | Food Matters

Groceries, take-aways, eating out and socialising Groceries are one of the three biggest household expenses for South African households.

Upper middle income and affluent South African households spend an average of 14% of their household expenditure on food, according to the How South Africans Spend Their Food Budgets report3 published by the Bureau for Food and Agricultural Policy in March 2020.

Decrease your food budget by shopping at cheaper super markets, choosing generic brands, bringing your own reusable bags, and getting a loyalty or rewards programme (if it’s free) for discounts and cash back.

Download the Snap n Save app for digital discount vouchers that you can accumulate and cash out at an ATM.

While the competition commission is regulating price increases for various consumer items, supply and demand has witnessed increases and decreases in the costs of certain foods. The Stats SA Consumer Price Index is monitoring fluctuating prices.

This is also a great time to start a veggie and herb garden, even if it’s on your kitchen window sill or balcony.

Do your shopping on a satiated appetite, so as not to buy impulsively based on hunger cravings.

Making a grocery list based on your weekly meal plan and in-store specials so as not to buy more than you need.

It’s also a useful way to avoid being tempted by take-aways, when you already know what you’ll be cooking for dinner.

The report also illustrates that an upper middle-income consumer can save an average of R290 per month by not eating out at restaurants, hotels or ordering take out, while affluent individuals can save between R400-R1 231 per month.

Similarly, social distancing measures mean we’re no longer going to be spending on hosting guests or attending social gatherings. Average monthly savings from R290 to R1 231.

3| Sin Tax: Cigarettes and Alcohol

While the nationwide lockdown is currently dictating the sale of alcohol and cigarettes, you could save a lot of money by cutting them out for good or by significantly decreasing your consumption. The average price of 20-pack of cigarettes is around R35. If you smoke five packs a week, that would equate to an average weekly saving of R175 and R700 each month.

South Africans are some of the heaviest drinkers globally, according to the Global Status Report On Alcohol And Health 20185, issued by World Health Organisation. Each person of drinking age consumes an average of 28.9 litres of pure alcohol per year.

According to Stats SA South African CPI Sources and Methods Manual6, beer makes up a 36.5% of household expenditure on alcoholic and non-alcoholic beverages, followed by fizzy drinks (13.3%), spirit coolers (9.9%) and wine (7.2%).

The average price of a 750ml bottle of red wine will set you back R64.38, while the average cost of a bottle of white wine is R55.49. If you forgo consuming a bottle of each weekly, you’ll save R479.48 each month. And if you’re a beer lover instead who drinks a six-pack a week, you’d be saving an average of R280 per month.

It helps knowing which products are getting more expensive over time, when you plan your budget. The cost of Rooibos tea (17.9%), fizzy drinks (12.4%) and wine (8.8%) have risen faster year-on-year than the prices of other alcoholic and non-alcoholic beverages, such as brandy, vodka, whisky and beer.

If you were to cut out smoking and drinking alcohol for good, your average monthly savings could potentially amount to R1 179.48.

4 | Car Insurance and the Petrol Price

As traffic has decreased, so has the risk of motor vehicle accidents, and South African insurers are adapting to these changing circumstances.

Clients of Naked Insurance who won’t be using their vehicle at all can opt for ‘CoverPause’ via the app and only pay one tenth of their comprehensive premium7.

MiWay offers their clients up to 20% off their car insurance if they work from home8.

OUTsurance’s Helping SA OUT campaign has seen a 10-15% decrease on car premiums9. If Discovery Insure clients drive less than 250km every month, they receive 25% cash back10.

Momentum’s short-insurance clients will receive a 10% premium rebate during May and June, while qualifying for an early cash back on their safety and no-claims bonuses. All clients have a ‘premium and cover pause’ option that will not affect their risk profile or future premiums, as well as a ‘downscale of cover’ option11. Average monthly savings depend on service provider.

5 | Keeping entertained

Unsubscribe from online shopping newsletters that will tempt you to buy unnecessary things by using the free, bulk-unsubscribe Unroll.Me email extension.

Consider downgrading your TV subscription package or opting for online streaming, if you’re armed with an uncapped fibre or a stable internet connection. A DStv Premium subscription offers 160 channels but puts you back R819/month, while Compact Plus (145 channels) costs R52 and Compact (129 channels) costs R399. There’s a huge potential monthly saving if you’re not merely subscribed for the sports channels or opposed to watching fixtures on YouTube after the fact.

The most popular option seems to be Netflix – from R99 (for a single device), up to R169 (for four devices on Ultra HD quality) per month for endless films, Netflix originals, documentaries, TV shows, Anime and the chance to cancel at any time.

The South African equivalent, Showmax, serves up local dramas, series, movies, and kiddies viewing with no fixed contracts for R99 per month. At the time of writing was offering a three-month subscription for R149 – that’s a 50% discount.

Other options include: Amazon Prime for $2.99 per month for the first six months, and $5.99 thereafter with the ability to cancel at any time, while Cell C Black (R99/month) offers subscribers 40 live TV channels, live sports, movies and TV series and options to choose daily, weekly, and monthly packages on custom content.

Meanwhile, Vodacom Video Play has 10 custom content packages that begin from R25 per month, with premium costing R99/month.

Exclusive Books now delivers via UberEats. There are also options like subscribing to Scribd (R139.99/month), Kindle Unlimited ($9.99), or Audible ($14.95) for unlimited audio and ebooks. Magzter, a digital newsstand available on desktop and as an app, offers over 5 000 newspapers and magazines for R79.99 per month that can be shared with three other family members. And once things slowly start getting back to normal, consider a book swap with friends or joining the local library. By opting for a movie date night at home, you can save at least R77 on a standard 2D movie. Average monthly savings from an estimated R950.

6 | Who’s the fairest of them all?

Though hair and beauty salons might be a thing of the past, at least for the time being, 5% of South Africans admitted to treating themselves to a visit to the hair and nail salon even after their money had run out; 16% still splurged on clothes, while 4% bought shoes on credit.

Undertake a DIY touch up of your hair roots after a few weeks before revisiting the salon for the full works. Try to treat your hair to some balayage or ombre colouring techniques with the help of a YouTube tutorial and pocket around R1 200 a pop for a cut, colour and treatment.

If your hairstyle allows it, try to trim dry and split ends yourself, before going for a quarterly or biannual cut. You could save an average of R730 by doing your own mani and pedi instead of getting gelish nails.

While the cost of these personal care products fell during lockdown4: shampoo (7%), bath soap (5%) and tissues (2.5%); you could save even more in future by clothes shopping during end-of-season sales.

Potential average savings from an estimated R1 930 every few weeks to two months.

7 | Tithing on a budget

If you’re a pious individual who regularly contributes one-tenth of your earnings, in the form of tithes, to your place of worship, consider contributing in creative ways and by paying them in kind to those less fortunate.

Shelters for the homeless, woman and children, and animals are in need of everyday items you might have no longer have any use for or that are lying around the house – such as ice-cream containers that can be used to package food parcels.

Donate clothes and shoes you no longer wear and that your children have grown out of. Magazines, puzzle books and children stories and toys also go a long way in making a difference.

Otherwise, give of your time or expertise by offering a number of free 15-minute consultations to start-up companies, friends or family, or by joining a work-related community whereby you advise those just starting out in your field.

If you earn R15 000 a month, your potential monthly savings would be R1 500.

8 | Banking better

Certain South African banks have announced three-month debt payment holidays on credit card payments, personal and home loans and vehicle finance. If you don’t automatically qualify, you might have to apply.

Here’s how they rank up against each other, in terms of monthly banking fees for a gold (mid-level) account to help your money for you. Capitec comes out the cheapest (R5), followed by FinBond (R80), and Standard Bank tied third with Absa (R107). Withdrawal fees (R500 from a native ATM) incur the following costs: Capitec (R6), followed by Standard Bank tied with FNB (R9.50), and Absa tied with Nedbank (R10).

Deposit fees for an amount of R500: transactions at Nedbank are free, while Capitec and FNB charge R5, and Standard Bank clocks in at R9.50. All those cents and rands add up at the end of the day. Potential average monthly savings depend on usage.

9 | Gym, classes, clubs

Go online While most gyms and recreational clubs have paused or decreased their membership fees during lockdown or are offering online classes, this might be the ideal inspiration to get into a new exercise routine, whether it’s jogging or cycling to the neighbourhood park or starting free DIY online classes in the comfort of your home. Hold yourself accountable by starting weekly classes within your tribe, whether you all stream a yoga or tai chi tutorial at the same each week or recruit a different friend to undertake different classes each day of the week, based on the classes they used to attend. You’ll find a variety of hidden skills among them, from meditation and pilates to running and dancing. Otherwise, there are hours of various exercise classes online that don’t require anything besides you showing up. Potential average monthly savings from an estimated R199.