Have you accumulated so much debt during the course of the year that you avoid phone calls from private numbers to dodge one of the many creditors hunting you down after the festive season?
Burying your head in the sand is not a solution and will not make your debt disappear!
Thami Cele, Head of Savings & Investments at Absa Retail Banking explains, “The festive season should be a time for fun, laughter and happiness. Sadly, it is also the season where many consumers fall even deeper into debt by making the most common financial mistakes”.
Below are some festive season financial tips that you can use throughout the year to ensure that you aren’t adding to your debt.
- Prioritise your expenses – Your bills need to be paid whether you celebrate the festive season in style or not. Avoid a situation where you have spent all your money on unnecessary items, prior to paying your essential bills such as your bond, school fees, debit orders, investments and clothes. Put away the money you need as soon as you receive it; or better yet, pay the necessary bills as soon as you can. This way you will be able to identify how much ‘festive’ money you have with the comfort of knowing that your day-to-day bills have been paid.
- Avoid credit cards or purchasing on account – Were you tempted to increase your purchasing limit during the festive season? Keep in mind that the money you are spending is credit and does not belong to you and you will have to pay it back. Do you really want to start the new year drowning in debt? Tip: make sure you understand exactly how the interest-free period on your credit card works, so you can avoid paying interest.
- Save towards your festive season (or any big) expenses – Have you ever thought about putting money away each month, starting in January, saving towards the next festive season or big holiday? If you put aside R600 a month from January to November, you will have R6 600 to spoil yourself and your family. And, if you put this money into a savings vehicle, you will add interest to the amount saved.
- Stick to your budget – Prepare a realistic budget and stick to it. A good idea is to keep your receipts and track your spending habits to monitor that you remain within your budget. If you realise that you have been a bit on the generous side of spending, then identify what your necessities are for the remainder of the month and only purchase items that you have listed as basic needs. Tip: Not sure where to start putting your budget together? Download this handy and budget-friendly (free) budget template to get you started: Budget
- Maximise your bonus – You have become accustomed to living on your monthly salary and whilst some months may be tougher than others, you somehow make ends meet. When December rolls around and you are rewarded with a bonus, be clever – don’t squander it but rather stick to your planned budget, invest your bonus or use it to pay off your debt.
“You work long hours and you deserve to treat yourself. But, this can be done sensibly and in a way that will allow you to start a new year without any financial stress. By being sensible about your spending habits and following the above-mentioned tips, financial mistakes can be avoided and you can enjoy any holiday season without it ending on a low,” concludes Thami.
Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.