Two weeks after the National Budget address, South African’s are settling into the impact of the announcements made as they navigate changes that will impact them both positively and negatively. While some of it was doom and gloom such as that much needed glass of wine being a little more expensive, or one’s vaping habit becoming regulated and taxed, there was also some great news for consumers, news that can help them maintain their personal budgets if they are managing, or improve them, if they are not.
“This year’s budget presented some key opportunities for consumers to make the most of their money and take the opportunity now to create generational wealth for their future generations,” says Carol Mazaka, Consumer Director at 1Life.
In fact, the finance minister specifically said that the intention is to ‘put money in the pockets of South Africans’ and so things such as the R5.2 billion available in tax relief and R70 billion odd allocated to job creation and youth employment, definitely lend themselves to supporting social development and are key to improving South African consumers’ financial positions,” continues Mazaka.
There was also a shift in personal income tax brackets and rebates of 4.5% as well as an increase in medical tax credits, offering additional relief to lower and middle-income homes and gives consumers some breathing room to make the best use of their current earnings and remain focused on using their budgets wisely.
The key however is that South African businesses need to support this ‘available budget’ to help consumers on their financial journey. While many are still coming out of the trenches that Covid created, they have a role to play in supporting consumer spend, by making purchases, even those little special ones, more affordable and accessible, where they too have been given reprieve on corporate taxes.
The good news is that while businesses increase their customer loyalty and relevance, the budget address also indicated an increase in small business loan guarantees as well loosened criteria to access these, meaning that for the consumer pushing their side hustle, there is now room to grow their businesses quicker – a key pillar to creating generational wealth.
“It is now that your side hustle could truly become your main hustle,” says Mazaka.
Furthermore, this year’s budget brought an unchanged VAT rate which is crucial to the lower income market and this, coupled with the inflationary increase to permanent social grants, 12-month extension of the SRD grant and an increase in other grants such as the child support grant, gives consumers the assurance of a regular ‘income’ and consistency in essential household goods.
“This doesn’t mean though that there isn’t still a massive disjoint in the lower market, with key basic human rights and needs not being met and the need is still overwhelmingly big among so many people in our country. For example, while these grants provide much needed relief, the cost of living is still very high in South Africa and so programmes that drive support of such communities remains critical. Programmes like Add Hope now have an even greater responsibility to support families,” says Andra Nel, Brand Purpose and Reputation Manager at KFC.
“Programmes focusing on food security support household budget, giving them room to use their grants on childcare and other basic human needs, and the growth and consistency in such programmes remains important.”
So, as we head into a new financial year with a glimmer of hope, consumers should spend some time learning how to manage their money, get out of debt, and save and invest, which are all essential to living within one’s means and will help consumers free up some funds to start building wealth. In fact, now is the time consumers should take their first steps to building their wealth by signing up for a financial education course and ensure that they know how to balance their needs with wants. They should look at using their budget wisely, looking for value and making sure they are getting their money’s worth in the areas that they do decide to spend.
“Most importantly, consumers need to remember that they don’t have to have millions or even thousands to start creating generational wealth or budget well – one small step at a time is what it takes,” concludes Mazaka.
Submitted by Orange Ink