South Africans are no strangers to disruption. From load shedding and civil unrest to devastating floods, the challenges in recent years have been many.
With the conflict in the Middle East showing no sign of abating, a new level of uncertainty is emerging. Oil and transport costs are spiking, global trade policies are shifting rapidly, inflation is set to increase, and GDP growth projections are trending downward.
Notwithstanding these challenges, South Africans are resilient. Head of customer experience at JustMoney, Sarah Nicholson, says, “The goal is not to try to predict what will happen next, but to build financial flexibility that can help you cope in turbulent times, even if resources are limited.”
She offers the following tips, ranging from small, practical steps to more advanced strategies.
- Build a shock-absorber fund. A small, consistent savings buffer can help you manage rising costs without turning to credit. Start by setting aside a small amount every month, and build this to cover a few weeks’ essential expenses. Keep the money separate and accessible.
- Be fuel-wise. Look into lift-sharing and public transport options. Service your car, check your tyres, reduce your load, and plan routes so you can drive at a consistent speed.
- Prepare for rising food and household costs. Plan meals, buy in bulk where suitable, and choose cheaper brands. Stock up on non-perishables, buying one or two extras per shopping order.
- Be cautious with debt. Avoid taking on new, high-interest debt. Focus on keeping up with payments and reducing existing credit balances.
- Keep a small amount of cash for emergencies.
- Join a community-based savings club. Stokvels offer access to pooled funds, and can support members facing unexpected expenses.
- Avoid panicked investment decisions. Media headlines can create anxiety, but reacting impulsively, such as panic-selling shares, can cost you dearly. A seasoned financial adviser can provide perspective.
- Diversify income sources. Consider renting out part of your property. You could also explore earning a hard currency, such as US dollars, via platforms like Upwork and Fiverr.
- Build offshore exposure. Gain access to international companies via investments in JSE-listed unit trusts or ETFs that track global markets. You can also use local investment platforms that exchange and invest rands in global portfolios, such as international equity or world index funds.
- Consider offshore investment and second residency. South Africans can invest abroad using the single discretionary allowance of up to R1-million per year, with no tax clearance needed. You can also consider a second residency or passport through an investment migration programme.
You may also obtain long-term residency, citizenship and a second passport through family heritage, or by offering in-demand skills such as AI and machine learning, healthcare, engineering, and skilled trades such as plumbing and electrical work.
“You can build financial security, even in the current conditions, by being prepared and having enough of a cushion to handle the unexpected,” says Nicholson. “Having a plan helps you respond calmly and avoid making costly mistakes.”