So you’ve bought a new home, successfully made the big jump to owning something a bit bigger, but inevitably this comes with some additional costs. Suddenly everything from your home improvement ideas, and even your entertainment, needs to be reassessed to account for the higher costs. According to Octogen, financial well-being specialists, the average South African spends roughly 23% of their income (after tax has been deducted) on housing, either by way of rent or bond repayments. This is a significant amount of one's income.
Alongside your higher monthly bond repayments, you will have to factor in home maintenance costs and the ever-increasing price of your daily essentials. Now, the idea of taking out a Personal Loan seems far more appealing. Hippo.co.za gathered some essential tips from bloggers and writers with experience in personal finance and asked them how to manage these higher costs while still living comfortably.
1. Draw up a budget and evaluate your spending habits
The team at Essentials lifestyle magazine advises that “after taking on any new financial responsibilities (whether you’ve just bought a house or had a baby), it’s more important than ever to create a budget. First prize would be putting together a budget before the house or baby comes into your life, so that you know exactly what you can (or can’t) spend, but it’s never too late to start a budget.”
“For us, there are four main steps to creating a budget. First, you need to write down your monthly income after tax. This is how much money comes into your bank account every month, and ultimately, it should determine what you spend. Second, you need to write down your expenses. It’s a good idea to split your costs into two types: necessary and unnecessary. So something like Medical Aid and your bond repayments are absolutely necessary, but entertainment costs and piano lessons could be cut. Don’t forget to include expenses you may not incur every month, but only once or twice a year. These are usually costs like servicing your car, buying school uniforms or the annual family holiday. Once you know exactly how much money you’ve been spending and what you’ve been spending it on, you can proceed to the next step: evaluating your spending. The third step is the most difficult, but also the most enlightening.”
“You may discover that you’ve been spending R500 a month on takeaway coffee, which you would rather use for a home renovation fund. Or it may show you that 5% of your salary is going into paying your cell phone bill every month. After evaluating your spending, the last step is to create your new budget, with adjusted spending targets negotiated with your partner, if you have one. These targets are important because they will help you stick to your budget. It’s often easier to resist the temptation of unnecessary spending if you know that your budget doesn’t allow it. We’re fine with not buying a new pair of shoes every month, because we know our budget only lets us spend money on shoes every second month.”
2. Act savvy
Shaney Vijendranath, founder of You, Baby and I
“Often we feel that we have to compromise, and yes we do but we do not have to compromise on our quality of life. We need to start being savvy and cutting down on unnecessary costs.”
“We need to relook at the little foxes that spoil the vine. When last have you looked at your bank statement and ‘cleaned up’ your accounts? What are your bank charges? Is it worth migrating to a different all-inclusive package? Are you paying for a myriad of little insurances? Saving the 20 x R6.50 on transfer costs and the R40 for unnecessary subscriptions make a huge annual difference. Imagine being able to put that extra R100 into savings. Let it earn interest for you.”
“Another cost factor is our insurance and that’s where Hippo.co.za can help you save. It saves you money by offering affordable options, and time which is a more valuable commodity in this rat race called life. Cut down on your eating out benefits? Your current club membership benefits may include hidden benefits like Club Dine – where you can pre-book a restaurant and pay for only one of the meals. It is time to look at your benefits and use them.”
“Reduce credit with simple effective measures like maximising the peak and off-peak electricity schedules, reducing water use and recycling goes a long way in not only saving the environment but increasing your cash flow. I have slowly reduced debt in my house, thus freeing up a little more each month to add to my bond. I have cut away the ‘luxuries’ but not to the extent of compromising my life and that of my kids. Carpooling has added more money into my pocket by reducing petrol and car maintenance costs.”
3. Spend wisely
“Moving to a larger property usually means that you need to spend more to maintain both interior and exterior in good condition. To help you curb costs, we look at ways to keep maintenance costs as low as possible, while ensuring your investment retains its market value.”
“There are many home repairs and maintenance projects that you can quite easily tackle on your own if you have some DIY savvy. And tackling annual maintenance, or fixing smaller repairs immediately, will reduce the possibility of these becoming more serious and more expensive repairs to fix.”
"Homeowners should take it upon themselves to do an annual inspection that covers their property from top to bottom, inside and out. You only need to put aside one day every year to do a thorough inspection of the structure and be able to pick up any repairs that need to be attended to.”
“If you do discover any defects or faults, you can then decide whether or not you have the know-how to tackle these as a DIY project, or call in a professional. Local websites like Home-Dzine offer hundreds of pages of practical advice that could help you to maintain and repair your home, while keeping costs as low as possible.”
So while your new home may present higher costs, if you engage with your personal finances in time by evaluating your spending habits, creating a budget and thinking smartly about how you spend, you need not necessarily compromise on your standard of living. However, if you need to borrow money in order to make ends meet, compare Personal Loan quotes on Hippo.co.za to help you find the best deal for you.