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What the Minister’s Budget means for your budget

Published Feb 28, 2022

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RANDS AND SENSE

By Sheila-Ann Robey

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In his 2022 Budget speech last week, the Finance Minister Enoch Godongwana was at pains to recognise the stress ordinary households are under. He did the unexpected and did not increase the fuel levy, nor did he increase ordinary taxes.

The skyrocketing cost of fuel, which has breached R20 a litre inland, has put a strain on everyone's pockets without any exceptions these past months. The cost of transport puts a further expense on just about everything, from the price of food to the costs of schooling.

The upside from this year's Budget is that there will be no extra tax expenses to add in planning your own budget this year. To manage costs, planning your own budget to make sure you can afford the things you really need, is the best way to make sure you can cope with rising prices and inflation.

Financial advisers like myself have seen many clients really struggling, having had to cope with the effects of the pandemic, from job losses to a reduction in earnings, in some cases even things like substantial medical bills for family members who had a particularly nasty brush with the virus.

To keep up with big expenses like paying off homes or household rent and school fees, many have had to dig into long-term savings such as retirement savings or have got further into debt. While both solutions solve immediate problems, they simply kick bigger problems down the road. It's heartbreaking to see people having to make these kinds of drastic decisions just to survive.

If you are stuck and wondering how you are going to make it with the money you have, making a financial plan can involve making a lot of difficult choices if you are looking to pay for the things you think you really need. Most people would be surprised at the things they spend money on that they don't really need.

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For example, maybe that luxury car that you have could be traded in for something a bit more modest to free up some cash until your earnings get better. Don't worry about what other people think of you right now, what's important is that you and your family keep it all together. Things always get better with a plan. Look ahead and you will realise there are countless opportunities to manage your spending.

I don't suggest cancelling things like insurance either. This in many cases is one of the first things people do to save money. Life is full of surprises; you can count on this. Being prepared for things like unexpected illnesses cannot be overstated.

In terms of everyday spending, no one believes that they have spare money at the end of the month but changing some long-term spending habits can shift this way of thinking, like looking at how you can save on your shopping budget. We all think we have money at the beginning of the month, so making savings commitments at the beginning of the month makes some sense.

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As we emerge from the worst of pandemic with better economic conditions being forecast, a lot of people are now getting back on track rebuilding their depleted savings as a first step. This is a good idea for the future, those who had savings at the beginning of the pandemic found that their extra money was a vital lifeline in the most difficult of times.

Pay attention to things like the annual tax-free savings allowance of R36 000. If you started using this allowance as an investment in your early twenties, you could for example easily find yourself with a tax-free lump sum amounting to a few millions in your late sixties. A lot of people think this is complex to do, but with the number of online savings apps around, it's surprisingly simple.

Everyone's lifestyle is different, but it is possible to get through difficult times and thrive into the future. Speaking to a financial adviser is probably a good idea if you're struggling and wondering what to do next or just wanting to have a more balanced long-term plan for yourself and your family.

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Sheila-Ann Robey is a Liberty financial adviser.

Related Topics:

BudgetFinance

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