THE picture painted by Finance Minister Malusi Gigaba’s medium-term budget speech is not a rosy one and once again Mzansi people will have to do more with less.
The poor growth, half-baked strategies and rising debt will only increase our current financial struggles – including savings and investments.
Elize Botha, managing director of Old Mutual unit trusts, said against the world’s 3,6% growth this year, Minister Gigaba said South Africa’s economic growth is falling short of the expected 1,3% GDP – it’s said to be 0,7% for this year. This drop in growth has led to a massive drop in taxable income.
“Government will be R50,8 billion short by next year,” she said.
With Mzansi’s basic or gross national debt expected to be at 61% of GDP by 2022, Botha said by 2020/2021, 15% of the budget will be servicing debt.
“Minister Gigaba spoke of some ideas such as managing government expenditure and increasing our competitiveness, but failed to provide details on how government could achieve this.”
But what does all these figures mean for you?
“The country’s income is down, the economy is not growing, poverty is growing and businesses are suffering.”
The 2017 Old Mutual Savings and Investment Monitor showed that 62% of household income is spent on living expenses, 16% on servicing debt, and only 15% goes towards savings.
“Harder times are coming so an emergency fund is important but you’ll also need to stretch money further.”
- Cut unneeded luxuries such as smartphones, data, satellite TV, takeaways, luxury foods and alcohol.
- Only 2% of people who invest do so in unit trusts or another equity-based system. Even so, it will be harder to keep up with inflation in the medium to long-term without growth assets in your portfolio. From R500 a month you can invest in a flexible, easily accessible, fully liquid portfolio, which means you have access to this money should you require it in an emergency.
- A staggering 40% of people have no formal retirement savings. Start today – the earlier you start, the more promising the outcome will be.
- The report noted that 37% of people said they had more than one job to cope with rising economic pressures.