This is the season to be jolly – but for many South African consumers, the holiday season also spells dark times for their finances, as they tend to overspend their budgets and create unwanted debts.
But it doesn’t have to be that way, says Stian de Witt, CFP, Executive Head of Financial Planning at employee benefits firm NMG Benefits. By doing some smart planning now, you can have the December holiday you want, without the New Year’s financial hangover.
Stian shares his top tips to consider when planning your festive shopping and holiday:
Have a festive season budget
If you’re going to survive the festive season, you need a budget. List all your income and expenses, see how much you have left – and then plan how to spend that money carefully. Having a budget is key to taking control of your finances. It sets boundaries and tells you how much you have available. Just remember to add all your expenses – even the hidden ones like bank charges. That way you will minimise those unexpected surprises
Shop with your head, not your heart
The festive season is an expensive time of the year. It is not just Christmas gifts: it is also school uniforms, stationery and books. Also “don’t get swept away by the holiday spirit. Make realistic, rational financial decisions, and differentiate between your ‘wants’ and your ‘needs’.
Avoid the debt trap
In a report released by TransUnion, it states that debt management remains a major concern, with more than one in three South Africans (38%) being unable to meet their current bills and loan obligations. Of those unable to pay their bills and loans, 39% plan to make partial payments, 36% will dip into their savings, 24% will borrow money from friends and family, and 11% plan to take out a personal loan. Another 10% said they don’t know how they’re going to pay. Once you are over-indebted, it is extremely difficult to get your head above water again and this happens easily if you don’t monitor and track your income and expenses – especially during the festive season.
Keep it practical
Another practical way of staying within your budget is to take the money you want to spend on gifts and put it in a separate envelope when shopping or download an Excel budget spreadsheet from the web to do your budget with.
Speak to a professional financial advisor
In the healthcare industry, ‘early detection saves lives. It is the same in the financial world. Getting an early grip on your finances can save your financial well-being in the long run. Speaking to a qualified financial advisor can put everything into perspective. They can help you to set realistic long- and short-term financial goals so that you can experience true financial freedom.
