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 coming after you during the festive season? Burying your head in the sand is definitely not a solution and will not make your debt disappear.
Thami Cele, head of savings and investments at Absa Retail Banking, explains: “With the festive season just a few weeks away, this 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 tips on how you can still enjoy a memorable festive season without further increasing your debt levels.
* 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 – Whilst you may be 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. You will have to pay it back and you will most likely only be able to do this in the New Year. Do you really want to start the New Year drowning in debt?
* Save towards your festive season expenses – Have you ever thought about putting money away each month, starting in January, saving towards the festive season? 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. Do not let the December hype and frenzy derail you. 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.
* 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 you 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 the 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 the festive season without starting 2018 on a low,” concludes Thami.