How To Stretch Your Salary

Times are tough and even though the inflation rate might be slowing down, prices are still going up. This means your cost of living is only going to increase as the months go by.

According to the latest BankservAfrica Disposable Salary (BDSI) data, the average South African salary grew just above the estimated rate of inflation with a 6.7% year-on-year growth recorded in May. This level is lower than that recorded in April 2016, where the disposable salary growth was 7.3%.

“The higher monthly average trend is likely to continue, in line with the anticipated public sector wage increases,” says Mike Schüssler, chief economist at economists.co.za. The BDSI median salary shows that 50% of individuals with monthly take-home salaries paid into their bank accounts took home at least R9 679 in May.

“This typical take-home salary grew below inflation for the second time this year, reflecting that the lower inflation rate of 2015 is having an impact on the typical take-home pay, as present inflation is far higher than the 4.6% average seen last year,” explains Schüssler.

This means that while your salary may have increased on an annual basis, it is just barely enough to meet the rising cost of living or the rate at which inflation is growing.

BankservAfrica now has four years of data on take-home pay, which enables insight into the debate on minimum salaries. The data reveals that individuals receiving between R10 001 and R25 000 into their bank accounts make up 38% of the broad take-home pay category. This group reflected “astounding growth” of 45% from May 2012 to May 2016, BankservAfrica noted. There was also a significant decrease in the group of individuals in the income category of R4 000 to R10 000.

“The average take-home pay increased by 24.3% over that period despite medical insurance and tax rates increasing far above that rate. The median take-home pay increased by 25.9%,” says Dr Caroline Belrose, head of knowledge and risk services at BankservAfrica.

Inflation increased by 25.1% indicating that generally take-home pay increased more or less in line with inflation.

Savings tips
We rounded up a few savvy tips to help you stretch your salary:

Shopping

• Never go grocery shopping on an empty stomach. You will be tempted to buy things you would not normally buy. Also, make sure you have a list before you hit the stores ….and stick to it. If you are not very disciplined, online shopping removes a great deal of temptation.
• Buy in bulk and save on costs. Goods such as detergents and household cleaning items last long and can easily be bought in bulk if you have the storage space available.
• Pay your bills online and ask for your statements to be emailed to you. You pay for statements that are mailed to you in the post so an emailed statement will cut this cost.
• Be aware of where you shop. Keep an eye out for specials. Sometimes the extra trip to get to a different shop is worth the effort. Avoid “convenience stores” because they are usually about 30% more expensive!
• Plan your meals around the specials at your local grocery store and include in-season fruit and vegetables.
• If you belong to loyalty schemes, save up all the discounts or points you accumulate over the year and use them in December.

_{Read the full article at: http://mayaonmoney.co.za/2016/08/how-to-stretch-your-salary/} 

September 11 2017 By Maya Fisher-French Financial Planning