One financial crisis or unexpected expense followed another until September rolled around. And now you’re wondering how you’re going to make this Christmas festive without a stokvel payout.
For many of us, joining a stokvel club is a lifesaver, come December, because – without year-end bonuses to depend on, it’s those savings that relieve the financial pressure that comes with the festive season. There’s groceries, new clothes for kids, travel expenses and gifts . . .
And with the repo rate having gone up again by another 75 basis points to 6.25, South African consumers are feeling the pressure – from food to fuel and transport costs, life is expensive.
If you’re one of the many people who did not our couldn’t join or keep up with stokvel club contributions, don’t lose heart.
With Christmas just three months away, you can still make it a merry season – with a little bit more sacrifice and discipline. Here are five quick tips to try.
CASH IN ON THOSE REWARDS
Use your loyalty programmes to help you free up the cash that you may need.
For example, you can use your eBucks or Discovery Miles to pay for groceries, fuel or beauty products. With the cash that has not been used to pay for these items, start saving for the festive season.
GET A SAVINGS STAMPS BOOKLET
Buy a few hundred rands’ worth of savings stamps at Shoprite Checkers every month and keep them aside to use in December.
They can be redeemed at Shoprite, Shoprite Hyper, Checkers, Checkers Hyper and USave stores.
STICK TO THE BARE NESSECITIES
Cut your budget for clothing, hair or entertainment by 5% every month and have that money go into a savings account.
USE YOUR PIGGYBANK
At the end of the week, put any cash left in your wallet into a Christmas Fund piggybank to be opened at the end of the year.
OPEN A GROUP SAVINGS ACCOUNT
Most banks have accounts for group-saving schemes such as stokvels and there are also apps such as Stokfella (on Apple iTunes and Google Play) which make a savings club easy to manage.
You can make it a six-month stokvel which can help you recover form your festive spending.
If you are one of the people who were lucky enough to be able to join a stokvel club this year and kept up with the contributions, it may be a good idea to invest that payout instead of spending this festive season.
Inflation has hit a 13-year high in South Africa, and with further increases in living costs on the horizon, many South Africans are having sleepless nights.
There are, however, consequences to drawing on your savings or foregoing your investments, whether completely or in part, says Shafeeka Anthony of consumer education site JustMoney.co.za.
“Of course, before making any changes, it is worth speaking to a financial adviser, who will take a holistic, objective view of your finances. Also, speak to your tax consultant about the tax implications of withdrawing or re-allocating funds,” she adds.
Shafeeka’s advises asking yourself the following questions before withdrawing savings this December:
WHY DO I NEED THE CASH?
Are you facing a real emergency? There is a difference between paying for essential repairs to your car, so that you can continue working, and drawing on your savings to splurge on a holiday.
Differentiate between a want and a need, and never access investments if you can avoid it.
AM I BUDGETING CORRECTLY?
Before you cash out your savings, take the time to go through your bank statements to understand where your money goes.
Examine what you earn, and how you spend that income. Careful planning and budgeting could prevent you having to access your savings prematurely.
CAN I EARN MORE?
Instead of digging into your savings, consider other ways of making money.
You could rent out a spare room in your home, or work for a ride-hailing service.
WHAT ARE THE TAX IMPLICATIONS?
Withdrawing funds before your retirement will affect how much you can withdraw tax-free later on.
Also, if your investment has been performing well in the markets, you could be liable for capital gains tax.
AM I SACRIFICING COMPOUND INTEREST?
Compound interest is calculated on the principal amount invested, and the accumulated interest – it is interest earned on interest.
If you have R100 000 invested for 10 years at an interest rate of 10%, you will have R270 000. If you withdraw that now, you will lose R170 000 worth of interest over the next ten years.
AM I HEEDING THE WRONG FINANCIAL ADVICE?
Many so-called financial experts on social media pontificate about impending stock market crashes, and warn that banks will seize your savings and investments.
Rather take the advice of a reputable, professional financial adviser. Keep those savings and investments intact and focus on long-term goals rather than short-term fluctuations.
“The general rule is to have six months’ worth of living expenses accessible in your savings account. If you hold more cash than this in an everyday savings account, then it could be worth moving the excess to a suitable investment that offers better returns. This will help you to keep up with, or beat, inflation,” says Shafeeka.