Beating budget blues

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The Budget Speech may have left many of you rattled, wondering how to adjust to the new VAT rates, the new taxes and the proposed fuel levy increase. But alas, not all is doom and gloom – some simple saving advice can go a long way!

Our biggest piece of advice: track your expenses. If you keep an eye on what you’ve spent where and when, you can create a little household budget. Eliminating unnecessary expenses and setting saving goals will allow you to determine how much you can spend on groceries, travel and entertainment on a monthly basis. We’ve put together some budget-beating tips to help you save:

Tip 1: Savings-savvy shopping

A trip to the grocery store or a quick stop for dinner ingredients on the way home can often lead to a shock at the till point: “When did life get so expensive!” Planning your grocery shopping is the ultimate proof of a little going a long way. A weekly meal plan eliminates the after-work rush of “I don’t know what to make, let’s just get take-out” costs, and by sticking to a well-planned shopping list you can avoid buying so much more than you had actually intended to buy.
The VAT increase from 14% to 15% has been justified as a necessary evil – one that’ll impact your grocery bills noticeably. But, once again, shopping lists should become your best friend. Certain foods are deemed essential foods and are exempt from VAT. These include:

  • Brown bread (not rye or low GI though)
  • Fresh fruit and vegetables
  • Milk
  • Eggs
  • Vegetable oil
  • Rice
  • Maize meal

It needs to be noted though that these foods are only VAT free in their uncooked state, so an egg sandwich on brown bread or a prepared salad won’t be exempt from the VAT increase.
In addition to the VAT increase, taxes on alcohol and cigarettes have increased drastically. Hand-in-hand with this so-called sin tax increase comes a sugar tax. Although the finer details have not yet been released, it is estimated that R1.9 billion will be raised through the implementation of this “healthy” tax on drinks with high sugar content. So, if your New Year’s resolution was a healthier lifestyle, then the Budget Speech just provided more motivation!

Tip 2: Saving on the road

One of the greatest Budget Speech shocks is undoubtedly the increase fuel tax/tax of fuel/increased fuel levy. Whilst 52c a litre might seem like a small figure, on a permanent basis, the effect will be felt in every pocket.  Filling up a 50-litre tank of fuel will effectively cost R26 more. This calls for solutions that’ll make the daily commute easier and more affordable – solutions such as carpooling and lift clubs with colleagues, school parents or friends in your area. Taking turns driving or all pitching in for fuel will not only reduce the cost, but also your carbon footprint.

In addition to this, financial experts advise the following in preparation for the possibility of further price increases: Calculate how much you spend on fuel on a monthly basis and set aside between 5% and 10% of this value every month as a buffer. This also makes for a nice little savings account, and if the money is not needed, that holiday you’ve been hankering after is suddenly in reach!

Tip 3: Healthy savings

Being healthy goes a long way – taking care of yourself does save money on doctors’ bills and ad hoc medication. Taking your vitamins, ensuring you live a balanced lifestyle, which takes into consideration exercise, relaxation, healthy eating, and sleeping enough, as well as taking care of your all-round emotional wellbeing will lead to you not falling ill as easily and being able to cope with stress better.
Understanding the medical cover Profmed offers you is also essential to making healthy, budget-savvy decisions.

Making use of healthcare professionals in the Profmed network, claiming back your medical expenses and understanding the PMBs (Prescribed Minimum Benefits) offered by Profmed can reduce your medical bills significantly. Medication can be very costly and can incur co-payment on your part. To avoid having to make a co-payment, always ask your pharmacist for a generic version of the prescribed drug.

Generic medication is made from the same ingredients, offers the same strength and is taken in the same dosage form as the original product but is manufactured or marketed by a different manufacturer. In many cases, this will result in no co-payment or a strongly reduced potential co-payment by you.

Tip 4: Saving at work

Do you find yourself visiting the local coffee shop or buying coffee at your canteen quite regularly? Are your lunches usually delivered to you or pre-bought from the local grocery store? If so, then you can save big bucks at work every day, without having to forgo coffee or food of course. Make your lunch at home, or pack from dinner – not only can you avoid the disappointment of late food deliveries, you also won’t be seeping an extra cent on your lunches! The same goes for coffee – a tin of coffee or a packet of coffee beans will last you a month and will cost you a fraction of the lattes, Americanos and Espressos from the coffee joint around the corner.

Key takeaways from the 2018 budget speech

  • VAT has been increased from 14% to 15% on non-essential items.
  • Sin taxes have increased between 6% and 10% and a sugar tax will be introduced.
  • The bottom three tax brackets will be adjusted for relief from fiscal drag, whereas the top four brackets won’t be receiving relief.
  • The fuel price will be increased by 52 cents per litre; 22 cents fuel levy and 30 cents for the RAF.
  • Estate duty wealth tax will be increased from 20% to 25% for estates more than R30 million.
  • Social, disability, care dependency and old age grants have been increased.
  • Free higher education will be provided for new first-year students with a combined family income less than R350 000 a year in the 2018 academic year. This will be rolled out in subsequent years until all years of study are covered.
  • These changes come into effect from 1 April 2018 onwards.