Cutting out the takeaways and coffees and still not making it to the end of the month? You need some serious financial firepower to beat your cash crunch! Here's how you can find the money you need to make it to month end – and more!
You can save money by making small sacrifices, but it may not be enough
Start by cutting out the small, luxury items in your budget. For example, cut out the R80 you spend on takeaways once a week and you will save R320 a month. That’s great! And if you save another R300 a month on pay tv and streaming services, you’re in even better financial shape.
But it isn’t always enough! Especially in 2023 when your grocery bill is higher, your electricity bill is still rising, petrol costs more, and your home loan has skyrocketed! Thanks to double digit increases in all these items over the last 24 months, you may need an extra R5 000 a month or more just to make it through.
Even the most frugal spender is going to need to make bigger budget cuts. Take a deep breath, and let’s get started!
How to make the big budget cuts
Making big budget cuts is a big step! But remember you are not alone. Many, many South Africans are already taking these steps and many more will do the same in the months ahead. We are all in this together!
Step 1: Work out your budget shortfall
Work out your shortfall by listing all your expenses and your income, and noting the difference between the two. Remember to include your insurance, savings and investments in your list of expenses. This will show you by how much you need to cut expenses.
Step 2: Identify your biggest expenses and look for ways to reduce or cut them
Cutting back on smaller expenses means small savings. Cut bigger expenses and it will make a significant difference to your budget, and your financial wellbeing! To get started, list your expenses in order of size, starting with the largest. This is usually a car or home. Then take a deep breath and look at ways to make big savings.
For example, if you have two cars you may have to sell one. It might make planning trips a bit more complicated, but you can save thousands in monthly repayments, insurance and maintenance. If you have one car, you may to need sell it and start using public transport.
Houses are also big-ticket items, and the bigger the bond the more interest rate increases are hurting. For example, the repayment on a R1 million home loan has increased over R1 500 in the last 12 months, and over R2 500 in 24 months. If this is unaffordable you may need to cut back. You can renegotiate your home loan terms, rent out a room, share your home with family members, sell your home and opt for a cheaper rental, or move in with family.
If you are renting you can look for a cheaper rental, share with family or move in with family and share costs.
You will need to accept there is a trade off when you cut big-ticket items! A smaller living space is a big change, as is one or no car. You and your family may take a bit of time adjusting. Be kind, respectful, supportive and encouraging as you downsize your expenses and lifestyle.
Want to find out more? Take the Cash Crunch course!
Like what you’re hearing? We’ve covered just some of the steps you can take to beat your cash crunch. Why not learn more in the free 30-minute Cash Crunch course from Truth About Money, a 1Life initiative!
With interactive learning and inspirational real-life stories, it also includes a downloadable budget spreadsheet that will help you build a pie chart of your expenses and identify your biggest monthly costs.
If you are battling to keep up with the cost of living, the Cash Crunch course is for you. Why not apply today and get the tools and expert knowledge you need to make your money last and find more if you need to!
Apply for the course here.
Take control and stress less
What are you waiting for? Start working on beating your cash crunch today and in a few months your bank balance blues and money stress will start improving! That’s good for your health, your mental wellbeing, and good for your future wealth building plans!