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2013 could likely be another tough year

2013 could likely be another tough year

Date: 2012-12-06
There is little doubt that 2012 was a tough year financially. Food, fuel, electricity and housing prices all increased and everyone had less money as a result. Now that it is nearly Christmas, it can be tempting to forget these financial hardships and have lots of fun spending on presents and festive food. Unfortunately, though, 2013 looks like it could likely be another tough year during which the cost of living could continue to increase. The wisest thing to do is to put some money away for 2013 before doing any Christmas spending.

Tendani Matshisevhe, marketing and communications manager at Sanlam Sky Solutions says economists have predicted the cost of living could continue to increase in 2013. Here are some statistics to be aware of:

  • In 2012, food prices increased more than 10%, with the price of super maize meal rising by more than 60%;
  • It now costs about R50 more to fill a 50 liter petrol tank than it did at the start of 2012. With further fuel increases likely in 2013, the costs of public transport could rise;
  • If Eskom has its way, electricity prices will rise by 16% next year April - and for the next four years after that.

Matshisevhe says that, with the increasing cost of living in mind, it is more important than ever to think beyond the holidays. "Most of us spend too much at Christmas and then when January comes, it is a long and expensive month, where we need to pay school fees, buy school uniforms and feed our families. It is vital to plan spending carefully. Pay for next year's school fees now. Keep money aside for textbooks. And plan for holidays away from home a year before the time. Don't suddenly take a trip to Durban on impulse. It must all be part of your long-term planning and budgeting."

At the same time, Matshisevhe warns not to skip on important payments. "With 44 people passing away on South Africa's roads every day, you shouldn't take chances with policies like your life, funeral and disability cover. These are often the first things to fall away over Christmas time. But that is a big mistake."

He says many people make use of stokvels, in which they save money for the year, and at the end of the year use that money to buy groceries for Christmas. "If you do save in a stokvel, make sure it is with people you know and trust and that you are getting the best deal possible." If you have planned your spending with a stokvel, you have an opportunity to be smart by stretching your savings into the new year or holding back some cash or goods for the long month of January.

Matshisevhe says those lucky enough to get a bonus should be wary of spending on impulse purchases. Bonuses can reduce long-term debt like a home loan, or be spent on big projects such as a home renovation. He says, "Of course you don't have to spend your bonus. You could also put it in your savings product. It might just come in handy during the rainy days - and we should prepare for lots of those in 2013."