When every rand counts: Why financial planning matters more than ever

For many South Africans, making ends meet has become an increasingly difficult balancing act. With petrol prices rising by more than R3 per litre on 7 October and the South African Reserve Bank's Monetary Policy Committee (MPC) recently increasing the repo rate by 25 basis points to 7.25%, households are being forced to stretch already constrained budgets even further.

The latest fuel price increase saw 95 unleaded petrol rise by R3.33 per litre, adding R166.50 to the cost of filling a 50-litre tank. For motorists filling up four times a month, that translates into an additional R666 in monthly fuel expenses alone. At the same time, consumers with variable-rate home loans and other forms of credit may be facing higher monthly repayments.

Some short-term relief is on the way. In the Medium-Term Budget Policy Statement on 21 October, Finance Minister Enoch Godongwana announced a temporary reduction in the general fuel levy from 4 November, of R1.50 per litre for petrol and R3 per litre for diesel. While welcome, the relief is temporary and covers only part of the recent increase.

These increases come at a time when many households are already balancing competing financial responsibilities, from groceries and school fees to debt repayments, savings and insurance premiums. With little room left in household budgets, finding ways to manage immediate expenses can understandably take precedence over longer-term financial planning.

But while cutting back may provide temporary financial relief, some decisions could leave families more financially vulnerable in the future.
The hidden cost of making ends meet

"When household budgets are under pressure, the immediate instinct is often to look at what can be reduced or eliminated. And while reviewing expenses is important, we also need to consider the longer-term implications of those decisions," says Zandile Makhoba, Economist, Lead Research and Insights Specialist at Liberty.

"For example, reducing or cancelling insurance cover may free up money in the short term, but it could also leave a family financially exposed should an unexpected life event occur. The challenge is finding the right balance between what is affordable today and what remains important for your financial security tomorrow."

This is particularly relevant in an environment where financial circumstances can change quickly, often due to factors beyond an individual's control. An increase in transport costs, higher debt repayments or an unexpected household expense can affect how much money is available for other financial priorities.

Rather than making financial decisions in isolation, consumers should consider how changes to one area of their finances could affect their overall financial wellbeing.
Financial advice is not only for those with money to spare

One of the misconceptions surrounding financial planning is that it is something to prioritise only when there is sufficient disposable income. Yet, when resources are limited and financial decisions become more difficult, understanding where your money goes and what it needs to achieve becomes particularly important.

A Financial Needs Analysis (FNA) provides a structured opportunity to assess your current financial position, understand your responsibilities and identify potential gaps in your financial protection.

It considers factors such as income, expenses, existing financial commitments, dependants, savings, insurance cover and longer-term goals to help determine whether your financial arrangements remain appropriate for your circumstances.

"An FNA is not necessarily about taking on additional financial commitments or purchasing more products. It is about understanding what you already have, whether it still meets your needs and where adjustments may be necessary," explains Tremaine Subrayen, Financial Planner at Liberty.

"When every rand counts, financial advice should help you make informed decisions about how to prioritise the resources available to you. Sometimes that means reviewing existing arrangements, identifying areas of duplication or understanding the implications of reducing certain financial commitments."

For example, a household that has recently experienced an increase in its bond repayments may need to reassess its monthly budget. An adviser can help the family review its broader financial position, consider its existing protection needs and explore available options without automatically compromising essential cover.
Building financial resilience in uncertain times

While consumers cannot control fuel prices, interest rates or broader economic conditions, they can take steps to better understand their financial position and prepare for changing circumstances.

Financial resilience is not necessarily about having unlimited financial resources. It is about understanding your financial commitments, recognising potential vulnerabilities and making considered decisions that support both immediate needs and longer-term security.
A financial plan should therefore not be viewed as a once-off exercise. As economic conditions and personal circumstances change, so too should the conversations people have about their finances.

For consumers who already have financial plans in place, this may be an appropriate time to review whether those plans remain relevant. For those who have never undergone an FNA, it can provide a starting point for understanding their financial position and identifying priorities.

"Financial planning cannot remove the economic pressures households are experiencing, but it can provide greater clarity about the choices available to them," says Zandile Makhoba.

"People are having to make difficult decisions with their money, and those decisions deserve careful consideration. The role of a financial adviser is to help clients understand their options, the trade-offs involved and how best to protect what matters most within their means."

Ultimately, as South Africans navigate rising living costs and increasing financial commitments, the value of financial planning lies not in how much money people have available, but in how effectively they understand, manage and protect it.