Cost of Living in South Africa: Where Your Money Goes and How to Stretch It

Prices rise faster than most salaries. You feel it first at the till, the taxi rank and the electricity meter.

Here is where your money goes, and eight ways to stretch it as the cost of living climbs.

Where does your money go as the cost of living rises?

A 10% saving on food, transport and electricity is worth more than cutting a dozen small things.

What are the 8 ways to stretch your rand?

1. Plan meals and shop with a list. Buy staples in bulk, and avoid impulse buys.
2. Compare prices. Check store specials and generic brands.
3. Share transport. Lift clubs, shared taxis and planned trips cut costs.
4. Cut electricity use. See saving electricity.
5. Review bank and card fees. See bank charges.
6. Switch airtime and data to cheaper bundles.
7. Cancel unused subscriptions.
8. Pay costly debt first. See debt consolidation.

How much can you save?

Here is a hypothetical example for a household with R10,000 take-home pay.

R480 a month is R5,760 a year, which can fund an emergency fund or a sinking fund.

How do you tell a real bargain from a fake one?

Compare the price per unit, not the pack price. Here is a hypothetical example for maize meal.

The bigger pack is cheaper per kilogram, but only if you will use it before it spoils. A “special” that costs more per kilogram is not a saving.

What should you not do when costs rise?

• Do not borrow to cover ordinary costs. A first one-month R1,000 loan can cost about R309. See what a R1,000 loan costs.
• Do not stop saving completely. A small amount keeps the habit.
• Do not cut insurance that protects you, such as funeral cover. See funeral cover.

How do you keep track?

Record spending for a month, then compare it with your plan. See how to budget. Check one line at a time, such as food, rather than everything at once.

Where can you find help?

If the numbers do not work even after cuts, look at extra income and support. See side hustles. The South African Social Security Agency lists grants for those who qualify.

If debts are the problem, see what to do when you cannot pay your debts.

Where could R1,000 a month come from?

A 10% cut on the big three lines saved R480 in the earlier example. Here is where a further R520 could come from in the same hypothetical household, taking the total to R1,000 a month.

R1,000 a month is R12,000 a year. Not every household can reach this, and some lines have less to give. The point is to look at the whole list and try one or two changes in each.

A few small, steady cuts beat a single drastic one that you cannot keep up.

How do you measure your own cost of living?

National inflation figures hide your own experience. A simple method gives you a personal number:

1. List ten items you buy most often: maize meal, bread, cooking oil, eggs, milk, chicken, a taxi trip, airtime, electricity units and a toiletry.
2. Record today’s price for each.
3. Repeat in three or six months, and compare the total.

Here is a hypothetical example. A basket that cost R620 now costs R661. That is an increase of about 6.6%. Track the items that rose most, and look for substitutes.

If your pay rises by less than your basket does, you are getting poorer in real terms, and you should plan around that. Statistics South Africa publishes the official figures if you want to compare.

Which cuts cost more than they save?

Some savings are false economies. Think twice before you cut these:

Cut what you will not miss, and protect what keeps income and health steady.

How can you share the plan with your family?

Cost-of-living cuts work best when everyone knows the reason.

Hold a short talk, and cover three things: the goal, such as an emergency fund; the two or three changes that apply to everyone; and the way you will check progress, for example a weekly look at the food budget.

Give children a small part, such as choosing between two cheaper meals, and thank them when it works.

Where you can, use free or low-cost support. Ask your municipality about indigent registration, which can lower the cost of basic services for households that qualify, and check whether anyone in the household qualifies for a grant. See side hustles if the income side needs help.

What should you remember about the cost of living?

The cost of living is not something you control, but your response is. Start with the biggest lines, change what you can and protect what keeps you safe. Measure your own basket instead of relying on headlines.

Share the plan with your family, and ask for help early.

A rising cost of living is easier to face with a small buffer and a clear budget. If the cost of living outruns your pay, look at extra income as well as cuts, and speak to your creditors before bills fall behind.

Frequently asked questions