The last few months have been typified by headlines of rising inflation across the world. In the US, Eurozone, the UK, and other developed markets inflation has risen to levels exceeding that of even our own, local CPI numbers by some margins!

But what is inflation, and why is it so crucial to our decisions as investors and consumers?
Inflation is the statistical representation of the change in prices of goods and services over the past period – most commonly one year. When considering the record inflation figures posted recently, it is important to remember that these are the historic rates of change over the 12 months preceding, and not what inflation is right now, or what it is anticipated to be in the coming 12 months.

What is of enormous concern to us is the rate at which prices have increased over these past 12 months. And while the debate continues as to whether inflation has started to slow or not, the increase in the prices of goods and the cost of living has clearly started to bite!

With this fresh challenge facing all of us, I thought it poignant to focus on a few tips about money management and daily financial planning to help each of us navigate the times ahead more effectively and efficiently.

Here goes…
Our expenses are all divided into two primary categories:
• Fixed expenses
• Variable expenses

Fixed expenses are difficult to reduce – hence the phrase ‘fixed’. These include cost items like one’s bond, car repayments, school fees, medical aid, insurance, etc. Yet even though these have an element of inflexibility to them, they demand our attention, especially during times of financial squeeze – talk to your bank about renegotiating your rates, or restructuring and consolidating your debt into the lowest-interest accounts possible; take the time to sit with your insurance brokers and discuss the terms of your policies, revaluing insured items or removing insured assets that no longer need to be insured. These are just a handful of ideas to consider.

For variable expenses, though, human behaviour can be a far more powerful tool during tough times. I like to apply the label of ‘being intentional with your money’, and managing every purchasing decision you make, from which supermarket you shop at, or how much of a particular household consumable to purchase, and many more.

So, when making any purchase, STOP and ask yourself these five questions:

1. Do I REALLY need this and what are the consequences if I don’t make this purchase?

2. If I need it, do I really need it right now?

3. If so, is the price good value for money?

4. If not, can I get it cheaper elsewhere?

5. If not, can I get a discount/earn rewards points?

Let’s go into detail on each one of these:

Do I really need this?
This really depends on what it’s for… Groceries? Sure! But even here, there are opportunities to save & get better value.

Some tips and habits to adopt:

• Avoid big brands and go for in-store brands where quality is the same, but the price is cheaper
• Make a shopping list and stick to it!
• Shop online

Shopping without a list is a recipe for disaster – you will end up impulse buying things you don’t need and driving the total cost of your basket higher. The other trap is items ‘on special’ – avoid these as it rarely works in the buyer’s favour.

And with Checkers Sixty-60, Woolworths Dash, and Pick n Pay Online, you don’t even have to leave the comfort of your couch, and the delivery fees are easily offset against the additional costs of impulse buys! (It is also so much easier to stick to a list when shopping online).

Do I need it NOW?
As above, if it’s an essential item, then yes – there are clear consequences to not having food… But impulse buys are where you need to apply this question. Try putting things you think you need now into your online basket & waiting two weeks… If, after 2 weeks you still think you need it, go ahead.

In most cases though, you’ll forget about it completely.

Congrats – You have just saved yourself some money!

Is this good value for money?

• This one’s simple… SHOP AROUND!
• Check similar retailers
• Use pricecheck.co.za
• Check online sites like Takealot, Loot, or others

This takes a bit of time, effort, and discipline. But, once you’ve done your research and broken down your shopping lists across the various stores and online sites, much of your work is done and only needs minor adjustments over time.

Can I get it cheaper elsewhere?
If it’s not the best value for money but you still need it, buy it from wherever you found it to be cheaper. See how much you could save by doing some switching today. Take the approach of having ‘no sacred cows’, and everything is up for discussion… you may be surprised how much you can save every month.

If I can’t get it cheaper, can I get a discount/points/cashback?
If you’ve come up short with the first 4 suggestions above, see if you can earn loyalty points with the stores you regularly shop at through a rewards card or cashback.

Downloading the Stocard app onto your phone means you can keep all your rewards cards in one place and always have them handy… just the other day a lady in the queue in front of me at Pick n Pay was arguing because the items she bought were not marked as on special only for Smartshopper cardholders, and she didn’t have her Smartshopper card with her. I leaned over the trolley and had the cashier scan my Stocard app which gave her the immediate discount of some R35 on her purchase – it’s not always much, but it does add up! (And it felt good helping a random stranger save money, too!)

If you ask yourself these questions and explore how you can save money or earn cashbacks or rewards from your everyday purchases, I guarantee you’ll get addicted and save yourself a small fortune in the process!

And then you are one step closer to taking this and investing it for your future!

The circumstances in which we find ourselves currently are not pleasant – especially as we approach year-end and January’s annual increases loom ever closer. But taking the time to focus on, measure, and manage your personal finances is crucial, and will better prepare you for the challenges that lie ahead.

As your team of trusted financial advisors, we are available to assist you where we can, guiding you on the above tips and other similar strategies in the hope that we can all emerge from this one step closer to the goals of financial freedom.