How to live smarter and happier in a country that is getting more expensive.

We have all been there, you’ve just been paid and you are thinking about all the lovely things that you are going to buy with your hard earned Madiba’s, but then you remember that you have a couple of debit orders coming off that will leave you broke and crying into your brown pennies for another month. You then hear the news that petrol, electricity and the price of air is going up (Gasp and hold!) and you wonder how you can stop living on the bread line and start living with a goal in mind.

You could start playing the lotto or start wishing upon every shooting star in hope that things will change. Unfortunately, winning the lotto is a one in 45 million chance and the proof behind wishing upon a shooting star is still up in the air. However, changing your mindset to a saving mentality rather than a lend and pay off mentality may assist you greatly in the long run. Here are some ways to live smarter in a country that is getting more expensive.

1. Get rid of that credit card

A wise man called Tyler Gregory once said “If you don't take good care of your credit, then your credit won't take good care of you”. And he is right, if you over extend yourself, you will pay for it in the form of steep interest rates which will hurt your pocket and your monthly available cash flow.

2. Stop buying things you don’t need.

Cars – If you have a reliable one, you don’t need another one!

The primary need for a car is to get from one destination to another, but in recent times this has become a symbol of wealth for many South Africans. A recent study has shown that consumers would rather pay for their car before their home loan or credit card debt.

If you maintain your car and service it regularly you could end up saving thousands of Rand's which could fill up your pocket and leave you smiling at the end of the month.

Expensive phones.

Phone prices have sky rocketed with Apple making R20 000 a normality for many consumers around the world. If you choose to go the route of owning a R20 000 phone, you will be paying around 400 Rand for 36 months with interest. If you don't want to incur more debt. Here are some tips to save your old phone and save some buckaroos.

1.   Update the operating system

2.   Replace the battery

3.   Get a new screen

4.   Increase storage capacity

An alternative is simply buying a cheaper phone that does all the things you need. You can pick up one of these for around R5000 which you could pay off within 11 months for the same monthly installment as an Apple phone over 36 months.

Cut out the bad habits.

Freddy Mercury sang ”Who wants to live forever?” Well, forever is a long time but if we could live long enough to enjoy the splendors of a hard working career, then we should. How do we achieve this? Cut down on all those bad things you enjoy so much, these things include sugar, alcohol and cigarettes. These products inflate yearly in the form of sin tax. Avoid hurting your body and do something that will aid your mind and your pocket.

There is also a direct correlation between success and good habits, one of my favorite quotes from Og Mandino is a good reference for this “Good habits are the key to all success. Bad habits are the unlocked door to failure.”

Save on groceries

“But X Store have the freshest vegetables” said Carol (aged 47) from Sandton. Yes, they have the freshest vegetables that you can buy in a store but it is not fresher than that which you can grow in the comfort of your own home.

Vegetable gardens are becoming a household standard these days. Even in sectional title units it is not uncommon to find vertical gardens hanging outside and planters sitting on the window ledges. So pick up a new hobby and reap the health benefits while you are at it.

3. Acquire another source of income

Do you have some sort of talent or hobby that you enjoy doing on the weekend or after work? Why don’t you start making money off that hobby? There are plenty of hobbies that are great sources of extra Moola.

Some suggestions to get your brain ticking include:

Baking – Make some cakes, sell them.

Start a Youtube channel: Become a viral sensation!

Woodwork: Make a chair for the haters to sit down on.

Handyman: Fix someone’s household issues so that his wife thinks that he did it.

Babysitting: Perfect for those who love screaming children.

Mow some lawns or do some landscaping: Like you did when you were a child, except you are stronger and smarter now so you could get through it without the tears this time.

Be a barman or waiter on the weekends: Live on the other side of the bar for a change.

Turn off the TV and do something else with your free time, like make money?

4. Save – How to do it the RIGHT way.

When someone says they can’t save R500 a month because they are too poor to do so but you see them spending R500 on a new pair of shoes every month, they are not too poor to save, they just have a poor person mentality.

Unit trust

There is a brilliant savings fund that most big financial institutions offer, called a Unit Trust. You could earn around 8% to 10% back on your money invested a year and have access to it (if needed) within a few days (But, it’s best to leave it there to grow). So if you had to put that R500 away every month. Within a year you could have R6256, at year 2, you could have R13 000, at year 5 you could have R36 706. Adjust this to what you want to achieve versus what you can afford. Hey, maybe you will have some extra money from that new found paying hobby to contribute?

Retirement annuity

If you have not started thinking about your retirement as of yet, then it is time you do so and an RA may be the thing that makes you consider saving for your old age.

An RA gives you money back every tax year. For example, if you contribute R10 000 during the course of the tax year, you will get a tax refund of 25% of your total contributions for the year in the form of a tax rebate (depends on your marginal tax rate) which equals to R2500 for free (Mahala!) in your pocket at the end of every tax year. You could reinvest that R2500 back into your RA or push this into your unit trust to further grow this fund so you can achieve those dreams that seemed a little far-fetched.

Once you get used to making cuts in order to save for a specific goal, it becomes easier to not expect to live off that money every month.

5. Call your insurance for a new quote

A smaller saving yearly comes in the form of a yearly phone call or email to your insurer. Your insurable items like household items and motor vehicle decrease in value every year. That means that your insurance premium should decrease with it. Call your insurance and save that extra 100 bucks and add it to your newly found RA or Unit trust.

6. Acquire good debt

Good debt? What’s that you ask? All debt is bad! Right? Wrong. Good debt comes in the form of a home loan. Buying a home is an investment that continues to grow in value. Although, initially you will be putting in more money in than what you would by renting the same place. But, in a few years, you will be paying far less than you would by renting that same property and eventually you will own that property as an asset.

7. Make purchases that make you happier in the long run

A study conducted by Dr. Thomas Gilovich, a psychology professor at Cornell University stated that money buys you happiness up until a point, for instance, if you bought a fancy car instead of going on a trip around Europe, the initial happiness with both purchases would be the same, but over time, the satisfaction with the car would go down, but the satisfaction with the memory of your travels would go up. It’s counter-intuitive that something like a physical object that you can keep for a long time doesn’t keep you as happy as long as a once-and-done experience does.

In conclusion

There are many ways to save on top of this including going solar, budgeting, working out at home instead of a gym, carpooling, holidaying close to home by being a tourist in your own country and tons more that I am sure you can think of. The idea of living smarter is not to cut out everything that makes you happy, it’s to cut out the things that are impulsive that add no value to your standard of living in the long run. Achieve what others are achieving by making smarter choices, it is possible.