9 WAYS TO COST CUT DURING COVID-19 - Liberty South Africa
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9 WAYS TO COST CUT DURING COVID-19
Seventy-six per cent of South Africans run out of money before the end of the month,
according to the More Month Than Money report by World Wide Worx and Ratepop1.
Budgets are bound to get tighter in months to come what with the First things first, draw up a monthly budget rather than keeping a
effects of the COVID-19 pandemic on the local, and global, economy. rough mental breakdown – use an app, if it’ll help. Evaluate your
The South African Reserve estimates that the country’s GDP shrunk by spending habits by analysing the last three months of your bank
32.6% during the initial five-week lockdown and that the economy will statements, so that you can see where you spend the most, and to
contract by 7% in 2020. help you separate your essential and non-essential expenses. The
average South African family spends around 40% of its household
Insurance is often the first expense to go when times get tough, mostly expenditure on non-essential products and services, according to the
because it contributes to a large percentage of household expenditure. Living Conditions of Households in South Africa2 report by Stats SA.
However, it plays an exceptionally vital role in protecting the financial That’s the place to start. Here’s a practical, belt-tightening guide of
future of your family, and is a necessary expense rather than a nice-to- how you can save money, so that’s there’s enough for those ever-
have at a time like this. important expenses that you really can’t go without.
2 | Food Matters: Groceries, take-
aways, eating out and socialising
Groceries are one of the three biggest household expenses for South
African households. Upper middle income and affluent South African
households spend an average of 14% of their household expenditure
on food, according to the How South Africans Spend Their Food Budgets
report3 published by the Bureau for Food and Agricultural Policy in
March 2020.
Decrease your food budget by shopping at cheaper super markets,
choosing generic brands, bringing your own reusable bags, and getting
a loyalty or rewards programme (if it’s free) for discounts and cash back.
Download the SnapnSave app for digital discount vouchers that you can
accumulate and cash out at an ATM.
While the competition commission is regulating price increases for
various consumer items, supply and demand has witnessed increases
and decreases in the costs of certain foods. The Stats SA Consumer
Price Index4 is monitoring fluctuating prices. This is also a great time to
start a veggie and herb garden, even if it’s on your kitchen window sill
or balcony. Do your shopping on a satiated appetite, so as not to buy
1 | A second interest rate cut impulsively based on hunger cravings. Making a grocery list based on
Many South African expressed a sigh of relief as the interest rate has your weekly meal plan and in-store specials so as not to buy more than
been cut to its lowest record in decades. The repo rate now stands at you need. It’s also a useful way to avoid being tempted by take-aways,
3.75%, which brings the prime interest rate to 7.25%, making it when you already know what you’ll be cooking for dinner.
cheaper to pay off your bond. The Monetary Policy Committee of
The report also illustrates that an upper middle-income consumer can
the Reserve Bank will meet again in the third week of July 2020 to
save an average of R290 per month by not eating out at restaurants,
review interest rates. hotels or ordering take out, while affluent individuals can save between
R400-R1 231 per month. Similarly, social distancing measures mean
South Africans will save R1 581 per month on a R1-million bond; R3 162 we’re no longer going to be spending on hosting guests or attending
per month on a R2-million bond; and R4 745 on a R3-million bond. social gatherings.
Monthly savings from R1 581 on a R1-million bond. Average monthly savings from R290 to R1 231.
Disclaimer: This material does not constitute tax, legal, financial, regulatory, accounting, technical or other advice. Any legal, technical, or product information contained in this document
is subject to change from time to time. The material does not contain any personal recommendations and, while every care has been taken in preparing this material, no member of Liberty
gives any representation, warranty or undertaking and accepts no responsibility or liability as to the accuracy, or completeness, of the information presented. The information contained in this
document is based on the relevant product prices available as at the time of publication. Any recommendations made by an adviser or broker must take a client’s specific needs and unique
circumstances into consideration. Liberty Group Ltd. is a licensed Insurer and an Authorised Financial Services Provider (FAIS no 2409). Terms and Conditions, risks and limitations apply.
3| Sin Tax: Cigarettes and Alcohol 5 | Keeping entertained
While the nationwide lockdown is currently dictating the sale of alcohol Unsubscribe from online shopping newsletters that will tempt you to buy
and cigarettes, you could save a lot of money by cutting them out for unnecessary things by using the free, bulk-unsubscribe Unroll.Me email
good or by significantly decreasing your consumption. The average extension. Consider downgrading your TV subscription package or opting
price of 20-pack of cigarettes is around R35. If you smoke five packs a for online streaming, if you’re armed with an uncapped fibre or a stable
internet connection. A DStv Premium subscription offers 160 channels
week, that would equate to an average weekly saving of R175 and R700
but puts you back R819/month, while Compact Plus (145 channels) costs
each month.
R52 and Compact (129 channels) costs R399. There’s a huge potential
monthly saving if you’re not merely subscribed for the sports channels or
South Africans are some of the heaviest drinkers globally, according to opposed to watching fixtures on YouTube after the fact.
the Global Status Report On Alcohol And Health 20185, issued by World
Health Organisation. Each person of drinking age consumes an average The most popular option seems to be Netflix – from R99 (for a single
of 28.9 litres of pure alcohol per year. According to Stats SA South device), up to R169 (for four devices on Ultra HD quality) per month
African CPI Sources and Methods Manual6, beer makes up a 36.5% for endless films, Netflix originals, documentaries, TV shows, Anime
of household expenditure on alcoholic and non-alcoholic beverages, and the chance to cancel at any time. The South African equivalent,
followed by fizzy drinks (13.3%), spirit coolers (9.9%) and wine (7.2%). Showmax, serves up local dramas, series, movies, and kiddies viewing
with no fixed contracts for R99 per month. At the time of writing was
offering a three-month subscription for R149 – that’s a 50% discount.
The average price of a 750ml bottle of red wine will set you back
R64.38, while the average cost of a bottle of white wine is R55.49. If
Other options include: Amazon Prime for $2.99 per month for the first
you forgo consuming a bottle of each weekly, you’ll save R479.48 each six months, and $5.99 thereafter with the ability to cancel at any time,
month. And if you’re a beer lover instead who drinks a six-pack a week, while Cell C Black (R99/month) offers subscribers 40 live TV channels,
you’d be saving an average of R280 per month. live sports, movies and TV series and options to choose daily, weekly,
and monthly packages on custom content. Meanwhile, Vodacom Video
It helps knowing which products are getting more expensive over time, Play has 10 custom content packages that begin from R25 per month,
when you plan your budget. The cost of Rooibos tea (17.9%), fizzy with premium costing R99/month.
drinks (12.4%) and wine (8.8%) have risen faster year-on-year than the
prices of other alcoholic and non-alcoholic beverages, such as brandy,
vodka, whisky and beer.
If you were to cut out smoking and drinking alcohol for
good, your average monthly savings could potentially
amount to R1 179.48.
4 | Car Insurance and the Petrol Price
As traffic has decreased, so has the risk of motor vehicle accidents, and
South African insurers are adapting to these changing circumstances.
Clients of Naked Insurance who won’t be using their vehicle at all
can opt for ‘CoverPause’ via the app and only pay one tenth of their
comprehensive premium7.
MiWay offers their clients up to 20% off their car insurance if they work
from home8.
OUTsurance’s Helping SA OUT campaign has seen a 10-15% decrease
on car premiums9. Exclusive Books now delivers via UberEats. There are also options like
If Discovery Insure clients drive less than 250km every month, they subscribing to Scribd (R139.99/month), Kindle Unlimited ($9.99), or
receive 25% cash back10. Audible ($14.95) for unlimited audio and ebooks. Magzter, a digital
newsstand available on desktop and as an app, offers over 5 000
Momentum’s short-insurance clients will receive a 10% premium rebate newspapers and magazines for R79.99 per month that can be shared
during May and June, while qualifying for an early cash back on their with three other family members. And once things slowly start getting
safety and no-claims bonuses. All clients have a ‘premium and cover back to normal, consider a book swap with friends or joining the local
pause’ option that will not affect their risk profile or future premiums, library. By opting for a movie date night at home, you can save at least
as well as a ‘downscale of cover’ option11. R77 on a standard 2D movie.
Average monthly savings depend on service provider. Average monthly savings from an estimated R950.
Disclaimer: This material does not constitute tax, legal, financial, regulatory, accounting, technical or other advice. Any legal, technical, or product information contained in this document
is subject to change from time to time. The material does not contain any personal recommendations and, while every care has been taken in preparing this material, no member of Liberty
gives any representation, warranty or undertaking and accepts no responsibility or liability as to the accuracy, or completeness, of the information presented. The information contained in this
document is based on the relevant product prices available as at the time of publication. Any recommendations made by an adviser or broker must take a client’s specific needs and unique
circumstances into consideration. Liberty Group Ltd. is a licensed Insurer and an Authorised Financial Services Provider (FAIS no 2409). Terms and Conditions, risks and limitations apply.
6 | Who’s the fairest of them all? 8 | Banking better
Though hair and beauty salons might be a thing of the past, at least for Certain South African banks have announced three-month debt payment
the time being, 5% of South Africans admitted to treating themselves to holidays on credit card payments, personal and home loans and vehicle
a visit to the hair and nail salon even after their money had run out; 16% finance. If you don’t automatically qualify, you might have to apply.
still splurged on clothes, while 4% bought shoes on credit1.
Here’s how they rank up against each other12, in terms of monthly
banking fees for a gold (mid-level) account to help your money for you.
Undertake a DIY touch up of your hair roots after a few weeks before
Capitec comes out the cheapest (R5), followed by FinBond (R80), and
revisiting the salon for the full works. Try to treat your hair to some Standard Bank tied third with Absa (R107). Withdrawal fees (R500
balayage or ombre colouring techniques with the help of a YouTube from a native ATM) incur the following costs: Capitec (R6), followed
tutorial and pocket around R1 200 a pop for a cut, colour and treatment. by Standard Bank tied with FNB (R9.50), and Absa tied with Nedbank
If your hairstyle allows it, try to trim dry and split ends yourself, before (R10). Deposit fees for an amount of R500: transactions at Nedbank are
going for a quarterly or biannual cut. You could save an average of R730 free, while Capitec and FNB charge R5, and Standard Bank clocks in at
by doing your own mani and pedi instead of getting gelish nails. R9.50. All those cents and rands add up at the end of the day.
While the cost of these personal care products fell during lockdown4: Potential average monthly savings depend on usage.
shampoo (7%), bath soap (5%) and tissues (2.5%); you could save even
more in future by clothes shopping during end-of-season sales. 9 | Gym, classes, clubs: Go online
While most gyms and recreational clubs have paused or decreased their
Potential average savings from an estimated R1 930 membership fees during lockdown or are offering online classes, this
every few weeks to two months. might be the ideal inspiration to get into a new exercise routine, whether
it’s jogging or cycling to the neighbourhood park or starting free DIY
online classes in the comfort of your home. Hold yourself accountable by
7 | Tithing on a budget starting weekly classes within your tribe, whether you all stream a yoga
If you’re a pious individual who regularly contributes one-tenth of or tai chi tutorial at the same each week or recruit a different friend to
your earnings, in the form of tithes, to your place of worship, consider undertake different classes each day of the week, based on the classes
contributing in creative ways and by paying them in kind to those less they used to attend. You’ll find a variety of hidden skills among them,
fortunate. Shelters for the homeless, woman and children, and animals from meditation and pilates to running and dancing. Otherwise, there
are in need of everyday items you might have no longer have any use for are hours of various exercise classes online that don’t require anything
or that are lying around the house – such as ice-cream containers that besides you showing up.
can be used to package food parcels. Donate clothes and shoes you no
longer wear and that your children have grown out of. Magazines, Potential average monthly savings from an estimated R199.
puzzle books and children stories and toys also go a long way in
making a difference.
Otherwise, give of your time or expertise by offering a number of free
15-minute consultations to start-up companies, friends or family, or
by joining a work-related community whereby you advise those just
starting out in your field.
If you earn R15 000 a month, your potential monthly
savings would be R1 500.
Mapping a way forward
with Liberty by your side
At Liberty, we’ve offered our customers the option to pay a reduced premium or waive premiums altogether on some of our products and in certain
instances until the end of September 2020.
Sound financial advice that is tailored to your needs is priceless and worth much more than its weight in gold, especially in the long-term. Don’t
make any impulsive decisions that could negatively impact your future. Rather speak to your Liberty financial adviser about how you can cut your
costs now, so that you can have peace of mind later, when it really matters.
Disclaimer: This material does not constitute tax, legal, financial, regulatory, accounting, technical or other advice. Any legal, technical, or product information contained in this document
is subject to change from time to time. The material does not contain any personal recommendations and, while every care has been taken in preparing this material, no member of Liberty
gives any representation, warranty or undertaking and accepts no responsibility or liability as to the accuracy, or completeness, of the information presented. The information contained in this
document is based on the relevant product prices available as at the time of publication. Any recommendations made by an adviser or broker must take a client’s specific needs and unique
circumstances into consideration. Liberty Group Ltd. is a licensed Insurer and an Authorised Financial Services Provider (FAIS no 2409). Terms and Conditions, risks and limitations apply.References:
1. More Month Than Money report by World Wide Worx and Ratepop
http://www.worldwideworx.com/wp-content/uploads/2019/07/TymeBank_More-Month-Than-Money-Report.pdf
2. Living Conditions of Households in South Africa by Stats SA
http://www.statssa.gov.za/publications/P0310/P03102014.pdf
3. How South African Spend Their Food Budgets report published by the Bureau for Food and Agricultural Policy
https://www.grainsa.co.za/upload/files/2020.03.23%20BFAP%20COVID%2019%20Brief%202%20-%20How%20South%20Africans%20
spend%20their%20food%20budgets.pdf
4. Stats SA Consumer Price Index
http://www.statssa.gov.za/publications/P0141/P0141May2020.pdf
5. Global Status Report On Alcohol And Health 2018, issued by World Health Organisation
https://www.who.int/substance_abuse/publications/global_alcohol_report/gsr_2018/en/
6. South African CPI Sources and Methods Manual by Stats SA
http://www.statssa.gov.za/cpi/documents/The_South_African_CPI_sources_and_methods_26Feb13.pdf#page=50
7. Naked Insurance Premiums
https://www.naked.insure/blog/insurenaked/do-i-need-insurance-when-im-not-driving-my-car
8. MiWay Insurance Premiums
https://www.miway.co.za/
9. OUTsurance Insurance Premiums
https://www.outsurance.co.za/company-news/outsurance-gives-a-further-10-discount-to-clients-driving-less/
10. Discovery Insure Insurance Premiums
https://www.discovery.co.za/car-and-home-insurance/get-a-car-insurance-quote
11. Momentum Insurance Premiums
https://www.momentum.co.za/momentum/campaigns/general/covid-19-message-to-our-clients-and-community/short-term-insurance
12. We Compared South-Africa’s Cheapest Bank Accounts For 2020
https://businesstech.co.za/news/banking/358975/we-compared-south-africas-cheapest-bank-accounts-for-2020/
Disclaimer: This material does not constitute tax, legal, financial, regulatory, accounting, technical or other advice. Any legal, technical, or product information contained in this document
is subject to change from time to time. The material does not contain any personal recommendations and, while every care has been taken in preparing this material, no member of Liberty
gives any representation, warranty or undertaking and accepts no responsibility or liability as to the accuracy, or completeness, of the information presented. The information contained in this
document is based on the relevant product prices available as at the time of publication. Any recommendations made by an adviser or broker must take a client’s specific needs and unique
circumstances into consideration. Liberty Group Ltd. is a licensed Insurer and an Authorised Financial Services Provider (FAIS no 2409). Terms and Conditions, risks and limitations apply.You can also read
