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Financial education initiative to help manage your finances.
Many South African consumers might be forgiven for feeling a little punch-drunk at ongoing increases of living costs. While many of these costs are out of our control, there are steps you can take to limit their impact on your wallet.
That’s the view of John Manyike, Head of Financial Education at Old Mutual, commenting on the
announcement of a major fuel price increase in June. He said this is the latest in a number of increases in
living costs that are likely to add more financial pressure on South Africans for the rest of 2016 at least.
The Department of Energy announced that petrol will increase by 52 cents a litre and diesel by 76 cents
a litre on June 1. This is over and above rising electricity tariffs and food inflation.
Manyike says: “Some South Africans in lower income sectors spend as much as a third of their
wages on transport. Fuel price increases generally lead to increases in public transport costs, which will in
turn reduce breadwinners’ disposable income.”
But it’s not just these consumers who’ll be affected, he adds: “As we know, South
Afrians with too much short-term debt are increasingly feeling the pressure on their stretched budgets. Their
predicament is aggravated by the prospect of more interest rate hikes, and the possibility of a repo rate
increase. The pattern of price hikes is likely to continue for the rest of this year, so reducing debt and living
costs must be sustained for some time to come.
Equally worrying, says Manyike, is the emergence of consumers incurring short-term debt to cover the
cost of basic foodstuffs. This is only likely to deepen families’ financial problems.
“The first step towards a debt-free future is to understand the importance of managing your
personal finances; break old habits that get in the way of financial stability and establish new, healthier
money habits,” says Manyike.
He explains five basic actions to implement right now to start your journey to being debt free:
Lastly, if your circumstances change, such as a loss of income, get updated advice from your - financial
adviser to ensure that you’re adequately equipped for your changing situation. It is better to
approach your creditors and discuss your impending difficulties than to ignore the problem or wait for them
to call you wanting to know where their money is.
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