Personal-Finance

Saving money amid may price hikes

2018-04-29 14:02

After the 1% VAT increase, consumers are in for another shock as the Automobile Association (AA) is predicting another petrol price hike on May 2.

In its mid-month report, the AA said petrol was set to rise by 41c per litre, diesel by 48c per litre and illuminating paraffin by 38c per litre.

However, with the increase in the price of petroleum and the rand sliding, South Africans may be in for an even bigger hike.

“We look at the data every day. Based on the current statistics, we predict a 48c per litre increase and that hasn’t taken into account the slide in the rand recently. The bottom line is, we are definitely in for an increase at the beginning of May.

"If we see an increase of more than 54c it will take us past the highest price of petrol [R14.76 per litre] that South Africans have ever paid. There is no way we will dodge an increase,” says Layton Beard, the public relations manager of the AA.

The predicted increase comes after a 72c increase this month.

Naked Insurance launches with AI offering

Insurance start-up Naked has launched car insurance that enables customers to interact using artificial intelligence (AI) technology. Naked says the product has been rebuilt for “social good”, and puts the customers in control of their insurance and saves them money.

Naked, which was launched this month, was founded by Sumarie Greybe, Alex Thomson and Ernest North, who all worked for many years with South Africa’s leading insurers before breaking away to start the company.

“We saw first-hand how insurers’ focus on underwriting profits overshadows claims handling, premium fairness and customer service,” says Thomson.

“We realised that to fix these problems we needed to change how we make money, to remove the inherent conflicts of interest.”

Naked says it takes a fixed portion of premiums to run the business, with the balance going into a pool to cover claims.

At the end of each year, money left in the pool goes to charities nominated by customers rather than towards company profits.

Customers are able to access the insurance through the company’s website – naked.insure – or through the app, without needing to talk to call centre agents.

Naked claims to cover customers in three minutes, and says its app allows customers to change their cover instantly and at any time.

Consumers benefit from price reduction in pork

While the price of meat is generally going up (see “Will you save money if you stop eating meat”, City Press, April 22 2018), the price of pork is seeing a marked decrease.

As a result, consumers who are feeling the pinch are settling for pork.

The price of pork is plummeting because the pork industry is currently suffering reputational damage as a result of the recent listeriosis outbreak.

According to FNB AgriBusiness, the loss to the value chain so far could exceed R1 billion.

“Because the demand for processed and cold meats fell sharply due to the health and safety concerns from the listeriosis outbreak, pork farmers have now had to redirect the pigs to the fresh meat market, thereby creating a surplus, and in so doing have further increased pressure on low prices,” explains Paul Makube, senior agricultural economist at FNB AgriBusiness.

Consumers have also benefited from a price reduction in maize.

“South Africa now has a surplus of maize, and the expected 2017/18 production is estimated at over 12.42 million tons. Therefore, if maize prices remain flat, they will have a major impact in sustaining the lower prices for consumers,” says Makube.

Money-saving tips

The Duke and Duchess of Cambridge’s new baby boy, who at the time of writing was yet to be named, is unlikely to struggle financially when he gets older.

However, this is not the case for most of the children born into this world. This is why it’s important to teach children how to make smart money decisions, including:

Distinguishing between needs and wants: Do this by taking children shopping. “As you put things in your basket, ask them if the item is a want or a need.

Let them explain their decision, then give them your answer,” says Nelly Mofokeng, managing director at Junior Achievement South Africa.

Creating a budget: “Start by giving them as little as R10 and telling them how much of that they need to save, spend and give. Give the money in coins so that your child can see his/her money jar fill up or get depleted,” advises Mofokeng.

How to earn money: Pay them small amounts for additional chores like washing the car or cleaning the bathroom. This will show them that they earn money for doing things.

Saving for a goal: Don’t just buy the toy that they want. Help them to save for it by teaching them to set money aside.

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September 16 2018