The cost of living is sky high – and climbing. Many South Africans are experiencing great difficulty in making ends meet. Every month something has to get trimmed from the budget.
But there are some things on which you shouldn’t even try and save, as doing so could cost you so much more in the long run. False economy, in other words.
By all means, shop around for the best deal, but do not cut these things out of your budget unless you have absolutely no choice.
1. Car insurance. Phone around for the best deal as there is quite a big difference in the costs of the various offerings. Theft, fire and balance of third-party insurance are essential. You could smash into someone’s new sports car and spend the rest of your life paying it off if you have no third-party insurance. Not good.
Also, you don’t want to be in a situation where you’re still paying off on a car that has been stolen or wrecked.
If you have to save, go for the high excess option – it’s usually much cheaper. It might mean losing R10 000 if the car is written off, but not R100 000.
2. Medical scheme membership. Unless you are happy to go to a state hospital, this is a non-negotiable. A low-cost hospital plan will cover most of the essentials. But paying for private hospital treatment out of your own pocket is not a possibility for 99% of South Africans. Few people have a couple of hundred thousand rand lying around.
3. Healthy fresh food. Buy fresh foods and cook from scratch – it might take you some time, but it is so much better for you than buying pre-prepared and processed food, or takeaways.
Healthy and fresh food is an investment in your health. It is much better for you to get the nutrients you need from the food you eat, than from supplements.
Good food is medicine – and cheaper than many types of medication.
4. Pension contributions. Pay in as much as you can – for many South Africans, pension funds are the only savings they have. If there is an option to pay in a few percent more, try and do it – the compound interest on that money will make a big difference to you years down the line when you need it the most.
Also, resist the temptation to use pension payouts for anything else, such as paying off debts or funding a holiday. It’s really difficult to build up that capital again.
5. Car services. If you don’t have a motor plan, by all means find a reputable private mechanic. But don’t skip services on the car. It will lower the resale value of your vehicle, and it means you won’t pick up mechanical problems as they develop. This could end up costing you a lot more than the price of the service.
6. Basic dentistry. I am not talking cosmetic stuff here, but basics, such as having cavities seen to. In the end these treatments are not that expensive, but if left unattended, the fallout from a basic cavity can end up costing you a lot of money. Shop around for a no-frills dentist, by all means, but do make the appointment. And buy a decent toothbrush.
7. Pet food. The ‘expensive’ vet foods actually end up saving you money. Tinned pet food and pellets from the supermarket aren’t really that cheap, but the seemingly more costly vet food seems to be a lot more balanced and ends up preventing endless visits to the vet. I was told by a vet that at a recent conference sponsored by one of the vet food manufacturers, they apologised to the vets for taking away so much business from them.
8. A mattress. You spend eight hours a day on this piece of furniture. Your office chair is the only other close contender. Old, worn-out and lumpy mattresses affect your quality of sleep and your ability to function. It could also cause expensive and long-lasting back problems. Just don’t go there.
9. A funeral plan. These can cost as little as R120 per month. If you were to die, you wouldn’t want your family’s last memories of you being forced to do a whip-round for your funeral costs. The funeral plan doesn’t have to be anything fancy, but make sure the basic costs are covered.
Also, if you have a family member whose funeral costs you are pretty sure will fall on you, take out a basic plan on them to save yourself the anguish of having to scrape together thousands if this person suddenly dies.
10. Good shoes. You spend a good portion of every day on your feet. Cheap and uncomfortable shoes will, over time, do damage to your feet. Not only can this cause you pain, but getting your foot problems sorted out can cost you a lot of money.
You don’t have to go and buy designer shoes for ridiculous amounts of money – well-designed and comfortable shoes will do the trick. And no, they don’t all have to be ugly.