How to stretch your salary

Times are tough and even though the inflation rate might be slowing down, prices are still going up. This means your cost of living is only going to increase as the months go by.

stretch your salaryAccording to the latest BankservAfrica Disposable Salary (BDSI) data, the average South African salary grew just above the estimated rate of inflation with a 6.7% year-on-year growth recorded in May. This level is lower than that recorded in April 2016, where the disposable salary growth was 7.3%.

“The higher monthly average trend is likely to continue, in line with the anticipated public sector wage increases,” says Mike Schüssler, chief economist at economists.co.za. The BDSI median salary shows that 50% of individuals with monthly take-home salaries paid into their bank accounts took home at least R9 679 in May.

“This typical take-home salary grew below inflation for the second time this year, reflecting that the lower inflation rate of 2015 is having an impact on the typical take-home pay, as present inflation is far higher than the 4.6% average seen last year,” explains Schüssler.

This means that while your salary may have increased on an annual basis, it is just barely enough to meet the rising cost of living or the rate at which inflation is growing.

BankservAfrica now has four years of data on take-home pay, which enables insight into the debate on minimum salaries. The data reveals that individuals receiving between R10 001 and R25 000 into their bank accounts make up 38% of the broad take-home pay category. This group reflected “astounding growth” of 45% from May 2012 to May 2016, BankservAfrica noted. There was also a significant decrease in the group of individuals in the income category of R4 000 to R10 000.

“The average take-home pay increased by 24.3% over that period despite medical insurance and tax rates increasing far above that rate. The median take-home pay increased by 25.9%,” says Dr Caroline Belrose, head of knowledge and risk services at BankservAfrica.

Inflation increased by 25.1% indicating that generally take-home pay increased more or less in line with inflation.

Savings tips

We rounded up a few savvy tips to help you stretch your salary:

Shopping

  • Never go grocery shopping on an empty stomach. You will be tempted to buy things you would not normally buy. Also, make sure you have a list before you hit the stores ….and stick to it. If you are not very disciplined, online shopping removes a great deal of temptation.
  • Buy in bulk and save on costs. Goods such as detergents and household cleaning items last long and can easily be bought in bulk if you have the storage space available.
  • Pay your bills online and ask for your statements to be emailed to you. You pay for statements that are mailed to you in the post so an emailed statement will cut this cost.
  • Be aware of where you shop. Keep an eye out for specials. Sometimes the extra trip to get to a different shop is worth the effort. Avoid “convenience stores” because they are usually about 30% more expensive!
  • Plan your meals around the specials at your local grocery store and include in-season fruit and vegetables.
  • If you belong to loyalty schemes, save up all the discounts or points you accumulate over the year and use them in December.

Lifestyle

  • Adopt a healthier diet and watch your grocery bill shrink. If you eat less meat and drink less alcohol, that will be a massive saving on its own.
  • Pack your own lunch instead of buying take-aways every day. Take this one step further and eat in every night instead of eating out. If you want to spend time with friends, take turns hosting dinner parties at home. It will be much cheaper than going to a restaurant. Or host a movie night at home instead of going to the cinema.
  • Instead of buying gifts, take the time to make something personal for your friends and family.
  • Cancel your gym membership and take up a hobby such as cycling. You could start walking the dog regularly or go for hikes.
  • Make food from scratch. For example, if you bake your own bread, this can cost you as little as R70 a month compared to buying a loaf of bread regularly, which can cost as much as R120 a month or more.
  • Buy secondhand clothes. You would be surprised at the amazing bargains you can pick up and the incredible quality of the clothes available at secondhand stores. Vintage clothing can be quite cool too and you can be sure no one else will be wearing the same thing. Your children are only going to use their school uniforms for a limited time so take advantage of the secondhand shop at their schools.

These are all simple changes you can adopt over time, which will eventually add up to a whole lot of saving. Whatever saving tips you choose to implement, make sure it becomes a habit – and watch the money in your bank account grow.