South Africa is in a recession and the economy is shrinking. After months of rumour and speculation, technical definitions and not, the facts are officially in, as laid out by the Minister of Finance, Nhlanhla Nene – South Africa is in the worst recession since 2008 and people all over the country are looking to tighten their belts.
“Now more than ever do we need to tighten up our spend, especially with another petrol price increase on the horizon,” says Annemi Mennen, Head of Marketing at Fintech, MyBucks, “It’s a tough time for all South Africans who must now look to make smart budgetary decisions to win the financial fight.”
Those burdened by debt are especially vulnerable, she goes on to explain, and should do their best to shed it: “South Africans are struggling more than ever and that is the reality of a recession. But, those in debt are especially susceptible to the recession’s pit as they have less money left over for debt consolidation.”
Such times call for strict measures, she stresses, and debt-burdened families might want to consider debt-directed debit orders to tackle the beast before it tackles them. In addition, “Negotiating new interest rates and insurance payments might very well be the solution. Re-evaluating those fixed costs can save considerably.”
Why not switch to a networked medical aid if it works for your family, and why not switch insurance or renegotiate existing rates if these haven’t been adjusted for a while? Recouping every cent is vital under a recession and can go a long way in helping your personal financial mission, debt-burdened or not.
Sometimes though, fixed costs are unmovable and in the context of a recession that can only mean one thing. Variable costs like your entertainment may need your strict financial whip, says Mennen.
Seriously though, she continues, “The South African economy is struggling. It is shrinking. There is less money going around and we must all look to cut where we can to make the most from the money that we have. Even if that means a change in lifestyle, remember, it’s not all bad, but just something to get used to.”
Importantly though, your savings are still vital under any economy, not least a recession. Save wherever you can, she stresses, “Because in these rainy days, a rainier day still might come when you need that extra cash. For when your car breaks down. For that medical emergency. For all those inevitabilities in life.”
Optimistically though, she also encourages saving for the good things in this time of financial stress:
“Just because you’re tightening up doesn’t mean that you should shed your goals. Sure, they might take a little longer to get there but every good budget still needs a reason to budget. For the most part, these are your goals. Your dreams. Your aspirations. No matter how big or small!”
Ironically, she goes on to explain, that collectively tightening belts actually makes things worse for the economy. Spending less means that others have less to spend and this is the horribly cyclical trait of any recession:
“Unfortunately, though, there isn’t much that we can do about it, but we’d do well to not entirely strangle ourselves all month. Budget here and there for a sneaky day out only if you can. Frankly, it’s healthy for the economy and helps us all.
“Regardless, tightening-up, for the most part is all we can do. So, spend wisely however you do and if you have a job, hang on to it. It’s only going to get tougher before it gets better,” she concludes.