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How to make the 2022 budget work for you?

Finance Minister Enoch Godongwana has shown that he recognises the stress ordinary households are under by subduing tax rises and repositioning other personal taxes.

Sheila-Ann Robey, a Liberty Financial Adviser, believes that the Minister is very aware that many families are struggling to cover their living costs and wants to assist them by not raising taxes or the fuel levy. With the economy improving, many people now need to start looking at how they will recover financially and get their savings back on track.

“The COVID-19 pandemic has put many households under pressure, and this has seen many people dipping into their long-term savings and investments to make ends meet, the tax implications of the budget speech will see a little extra money in consumersโ€™ pockets. This is an opportunity for many to get back to saving and re-establish their financial stability,” she says. Amongst other things, the Finance Minister has also acted against so-called tax bracket creep which has increased because of higher inflation.”Many earners were finding themselves being pushed into higher tax brackets because of inflation related salary increases.

“But recent increases in the petrol price have edged a lot of people into cutting back on basic household spending, including on things like food.

“This had a very real effect of taking money away from struggling households, so the Minister’s tax adjustments are designed to help people make their money go a bit further in the face of inflation,” says Robey.

Here are her four key tips for making the best of this year’s budget:

  • This year, thankfully, your money won’t be affected by any tax rises. So, it makes sense to think ahead and create your own financial plan to keep your finances on track.
  • With slightly lower taxes, now is a good time to put money back into your savings. You can save up to R36 000 a year tax free, according to current government savings rules.
  • If you are not all that financially savvy, and that’s most of us to be fair, you can make use of friendly savings apps like Stash to help you save.
  • Now is the time to consider personal insurance. Learning from the pandemic, preparing financially for lifeโ€™s unexpected events, requires a financial safety net – whether its cover for life or lifestyle or simply ensuring your will and testament are in order.

While taxes might not be going up, Robey says consumers still need to be aware that interest rates will be going up soon and not getting into debt or accumulating further debt, is key to people keeping their heads above water.

“Consumers are already consumed by debt and the key to financial recovery is to address this and avoid taking out further debt. Speak to a Financial Adviser who can help you find ways to make of most of the budget speech impacts on your personal finances and navigate achieving any relief you need,” concludes Robey.

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