Have you been buying your electricity at month-end or throughout the month? You’ve likely been overspending. Here’s how Eskom’s Incline Block Tariff system works and why you should consider buying your electricity units at the beginning of the month, plus general electricity-saving tips.
How does Eskom’s Incline Block Tariff system work?
The Incline Block Tariff system was designed to encourage low consumption and to make electricity affordable.
Prepaid electricity units in South Africa can be worth R1.40 per kWh and can cost as much as R2.69 per unit close to the end of the month. This is because the price of electricity units in South Africa is split into tiered blocks. For example, this means:
Everyone starts in block 1 at the beginning of the month, when units are most affordable. The price per unit for block 1 is R1.26 for the first 50 units.
Once you’ve purchased the maximum number of units for block 1, you’ll move to block 2 where you’ll be charged R1.62 per unit, capping at 350 units. Thereafter, you’ll move into block 3 and then 4, depending on how many units you reach.
Each household is, therefore, billed differently based on the number of units they buy and how far up the tier of blocks the amount goes. The more power you use every month, the more you will pay.
The good news is that even if you reach block 2, your purchase history resets in the new month and you’ll move back to block 1. You can find your area’s tariff block here.
Due to this, it’s best to buy the electricity that you need once per month and in block 1, before you reach 350kWh if possible, otherwise you’ll be charged at a higher rate. Monitor how many units you use per month by keeping a log to get a clearer idea of your household’s usage, and then calculate how much you’ll need to spend based on that.
The less power you use, the fewer units you’ll need and the less money you’ll have to spend. Here are some tips to make your units and go further every month:
Try to do all your washing in bigger, fewer loads rather than many small loads.
Use LED light bulbs as they use 90% less electricity and last up to 20 years.
Don’t set your fridge to an unnecessarily cold temperature. Set your refrigerator between 2°C and 5°C and your freezer between -20°C and -22°C.
Cover your geyser with an insulation blanket.
Consider investing in a solar geyser system or panels.
Only use the heater in one room and for a specific amount of time.
Switch off all unused appliances at the wall.
Limit the number of baths you take and how full you fill the tub, or take shorter showers instead.
For more advice related to saving, read this helpful article:
The nationwide lockdown, implemented due to the COVID-19 pandemic, has decreased the kilometres we travel every month. However, fuel prices are not likely to drop drastically in 2021. In fact, the price of petrol has increased steadily since the budget speech in February. Learn how petrol hikes impact your pocket and use our tips to make your money and kilometres go further.
According to the Automobile Association, the current petrol hikes in South Africa can be attributed to an increased optimism surrounding economic recovery as the global roll-out of COVID-19 vaccines becomes more of a reality. The following also plays a role:
When the price of petrol increases, it affects more than just the amount of fuel you can get per rand. Some ways in which you may be impacted by petrol hikes could include:
Rise in public transport costs
When the price of petrol increases, South Africa’s public transport industry suffers. Not only do the drivers feel the pinch, passengers are also impacted by increased fares for both local and long-distance travel.
Mark-up on grocery prices
The higher the cost of fuel, the pricier it becomes to move produce and other items around the country. As a result, this makes the average monthly groceries for households more expensive.
Small businesses suffer
A bigger budget for petrol and other necessities means a smaller budget for luxuries. This impacts the income of smaller businesses, not only because people are making fewer purchases, but because the cost of supplies increases, too.
How can you save on petrol?
Although fuel hikes and the pinch they bring are inevitable, there are ways to cut down on your petrol usage:
Money may not be able to buy you happiness, but it can help secure a comfortable future. Read our tips.
Financial stress negatively impacts nearly every facet of your life, affecting concentration and focus, your work performance and family responsibilities, which can lead to problems in relationships. Fortunately, if you make wise financial decisions, money can bring relief.
Here are 4 ways to put your money to good use:
1. Get value for your money
Work on significantly reducing your bills and getting more value for the money you have. For example, this could mean paying your debt and not taking on more credit. This is important as the less debt you have, the more you can save for emergencies and prevent the debt cycle.
2. Prioritise saving
Saving ensures you have an emergency fund or a safety net for unforeseen events. It also enables a better future, creating the possibility of enjoying financial security in your golden years. Ideally, 10% of your monthly earnings should go towards savings. If you can’t afford 10%, commit to an amount that is more realistic. In some cases, 10% can be achieved if you reassess your expenses.
3. Spend wisely
While splurging can give you temporary happiness, carefully planning your finances will ensure peace of mind. Set up a monthly or weekly budget and stick to it as far as possible. Include your expenses, debit orders, savings allocation and a portion for recreational spending and entertainment.
4. Pay it forward when you can
Helping others can make you happier. When you can afford to, donate a portion of your income to those in need. You can either give money or you can buy essential items, such as blankets, perishable foods, clothing and soap, and donate those instead.
Remember, your financial coach is ready to help with confidential and professional financial coaching and support, over the phone or electronically.
The information is shared on condition that readers will make their own determination, including seeking advice from a finance professional. E&OE.