South African consumers have undoubtedly experienced financial strain over the past few years, facing repeated fuel price increases and rising living costs. As the holiday season approaches and people prepare to spend time with loved ones, it is crucial to exercise caution and avoid excessive spending. Overspending during the festive period can have long-lasting consequences, forcing individuals to play catch-up with their finances in the following months, warns Lebogang Gaoaketse, WesBank Head of Marketing and Communication.
WesBank offers valuable tips to help maintain financial well-being during the festive season and beyond. Here are five key suggestions:
1. Utilise early December pay cheques for January expenses:
Companies often pay their employees earlier in December due to holiday closure. It is essential to allocate this pay to cover the expenses that are due in January. While some individuals may view the early windfall as extra money for holiday activities, doing so may negatively impact their financial situation in the new year. Before spending extravagantly on unbudgeted holiday activities, it’s vitally important to ensure that you have sufficient funds to honour all your debit orders that are payable before your next pay cheque.
2. Avoid cancelling debit orders:
In desperate situations, individuals may choose to cancel debit orders to utilise the funds for other obligations. However, this practice can lead to more debt in January as missed payments result in double debits. It not only puts pressure on consumers at the beginning of the year but also harms their credit record.
3. Draw up a Festive Season shopping list:
Going into a store blindly can often lead to impulse purchasing and buying things that you and your family want but don’t necessarily need. Developing a shopping list and setting a budget will help you to focus on the things that you really need while ensuring spending remains within your means.
4. Don’t spend money you do not have:
People often anticipate an annual bonus and spend money on credit to make their purchases in advance, planning to repay the debts when their bonus is paid. However, this approach carries significant risks. It is wiser to spend money that is already at one’s disposal. This is particularly crucial in the current uncertain economic climate, where businesses may struggle to provide bonuses to their employees.
5. Plan affordable trips:
Spending time with the family should not break the bank; it should be fun and packed with memorable experiences. Find reasonable places to accommodate the family, consider self-catering facilities to minimise the cost, and come up with cost-free activities that everyone can enjoy.
Gaoaketse emphasises the importance of implementing a robust financial strategy during this time. “Careful planning and responsible spending are far more rewarding than taking advantage of festive deals or using additional credit facilities to satisfy impulse purchases. Instead, save up for the year ahead and try to live a credit-light lifestyle – one where you only use credit facilities for the absolute necessities, and have enough money to pay your loans as well as spend on yourself and loved ones when needed,” he concludes.
By following these guidelines, consumers can increase their chances of starting the year on a good financial footing to endure the economic challenges that might lie ahead.