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Considerations to help you save some money and live within your means

27 June 2022 FNB

High inflation is here to stay

South Africa’s annual inflation figures continue to increase with headline inflation accelerating to 6.5% in May from 5.9% in April and March, breaking through the upper limit of the South African Reserve Bank’s monetary policy target range. The latest inflation figure has challenged consumers to consider alternative ways to help them save a bit more while trying to maintain living within their means.

The latest CPI report by FNB Economics highlights that, “Food and non-alcoholic beverages (NAB) inflation accounted for most of the shock, with an enormous increase of 2.1% m/m and 7.6% y/y, likely indicating that more of the global price pressures are filtering through to local prices. Cereals and meat inflation provided the most upward pressure (just over 0.6 percentage point each), while dairy and eggs as well as oils and fats added nearly 0.3 percentage point each. Vegetables, NAB, and other foods contributed around 0.1ppt to the monthly pressure.”

Households are feeling the pinch. “Inflation coupled with the interest rate increases are putting strain on South Africans’ pockets and households. We don’t foresee interest rates and the cost of living to come down anytime soon, so we encourage consumers to continue saving money, resisting the urge to dip into their retirement savings and look at how they can maximise their short or long-term saving goals,” says Himal Parbhoo, CEO FNB Retail Cash Investments.

Ester Ochse, Product Head for Money Management echoes Parbhoo’s sentiments and believes that consumers need to constantly evaluate their spending habits and make conscious spending decisions daily. There needs to be a shift in mindset especially when it comes to money and savings. You need to be aware of how and where you spend your money. This initial step is crucial and will help your money go further.

Parbhoo advises consumers to be more frugal with their spending and intentionally look at how to save a bit more by making small daily changes:

1. Plan your week
Look at your week ahead and plan your week accordingly. According to FNB Data, amongst the top 10 items that consumers are budgeting for include groceries, fuel, phone contracts and prepaid, savings and investments. “It’s not going to get easier, so plan your week and plan when you will be doing your shopping or travelling to the office. Certain stores have discount or pensioner days, so try and do your shopping on those days. Planning will help you manage your time and save a bit more,” advises Parbhoo.

2. Check your weekly and monthly budget
“Going through your weekly and monthly spending will help you identify how much you can afford and how much you can save based on your budget. During this time, it important to intentionally see where your money is going as every rand or cent counts. Use the tools that are available such as the Smart Budget tool on FNB’s app under nav-igate life. You can also free up your weekly or monthly cashflow by using the points earned on your rewards cards or loyalty programmes,” adds Ochse.

3. Shopping online
Since the pandemic, local stores have ramped up their services by moving online – to offer a more convenient, safe, and efficient shopping experience. Given the access to these shopping sites look at discounts and possibly use online delivery apps for certain items that you would like to order. This will help you save on fuel and pick up a few bargains that could help you save a bit more. The added advantage is that it is easier to stick to a list when shopping.

4. Consider having a savings account
Given that inflation is increasing, look at appropriate savings vehicles that can help you save or invest. Parbhoo adds, “Short-term savings pockets help you contribute monthly through either 7 days or 32 days’ notice account or fixed deposit. Having these savings accounts will help you better manage any emergencies that might creep in as life happens.”

5. Save your change
Old school is sometimes cool and when it comes to savings, putting your spare change in a jar or box always works. Save your spare change in a glass jar or box and after a few months see how much it comes up to. For FNB customers, the Bank Your Change® feature allows all FNB customers who have a transactional bank account to save a portion of their change each time they use their FNB debit card to buy goods or services. To date FNB customers have saved over R5.5 billion in the last three years by saving small amounts ranging from R2 to R50 through their FNB Savings Account.

Inflation will keep on increasing, so we encourage you to understand the potential of saving over time. “Your savings whether big or small will make a difference to short or long-term financial planning opportunities. It’s important that you start saving now. It’s this step that will help you in the longer term,” concludes Ochse

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