April is here along with the 2018 VAT rate increase. It’s affect on your finances might be more than you think. DebtSafe spokesperson Matthys Potgieter notes: “As of April 1 almost every monthly expense will increase by a percent and there are tough times ahead.”
One percent means a lot
If you usually spent R11 400 on your monthly expenses (VAT included), you will now spend R100 more and so on. Potgieter says: “It all adds up in the end.” VAT-exempted services, such as public transport, and goods, such as brown bread and eggs, will of course not be as affected. So, what will change?
VAT affected services and products
Any type of service agreement fee, whether essential or non-essential, will increase. This includes cellphone contracts, DSTV and gym membership agreements. Aside from zero-rated goods, groceries will also be more expensive. A monthly grocery list of R1 500 will cost you an additional R156 a year.
Short-term insurance on household content, for example, will increase. Bank administration fees will increase and consumers can expect to pay more on vehicle finance account fees and home loan administration fees.
“The above ‘small amounts’ can be misleading to the eye. It all adds up. The VAT increase will undoubtedly affect your pocket and the time to take responsibility for your financial situation is now,” explains Potgieter.
Take action now!
Potgieter shares a few tips to keep your debt to the bare minimum and become a responsible money-savvy consumer especially during tough economic times.
Get rid of unnecessary luxuries such as a club membership or garden service. Stop reckless borrowing habits. Make paying off your debt a priority by either paying off smaller debts, like a clothing account, first or by getting rid of high interest rate debt. Get professional help if you need it!
Don’t be afraid to approach an accredited financial advisor, your banker or, in worst case scenarios, a debt counsellor like DebtSafe. Be the head of your own financial environment by adding small, yet efficient, behaviour tweaks in the way you manage your finances. You will not regret it.