Don’t give yourself debt for Christmas
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Between Covid-19 and social unrest, major retail outlets have taken a knock this year and will be pulling out all the stops to entice shoppers this festive season, but being vigilant about pricing and specials over December will prevent unnecessary debt at the start of the new year.
Though many shoppers have begun to see the Black Friday price hike-and-drop tricks for what they are, representing not much of a bargain at all, retailers over the festive season frequently deploy what are known as “loss leaders” – items that are sold at a marginal loss for the business because they bring shoppers into the store.
“The rationale for doing this is that once shoppers have come into the store, they will fill their trolleys with more items than they really need,” says Deon Nobrega, co-Founder and MD at Paymenow.
Paymenow’s Head of Business Development, Bryan Habana, says we should not forget that along with Christmas presents and holiday costs, January rolls around quickly with its hikes in bills and premiums.
“The key to successfully avoiding a debt trap over the festive season is to plan for December, and then plan again for January and beyond. These plans should be interlinked, because 2022 starts with increases in all our household premiums, such as medical aid, and we shouldn’t forget that consumer price inflation is accelerating so each shopping basket costs more. The Reserve Bank has also begun its rate hiking cycle by raising the repo rate by 25 basis points, which means any debt incurred over the festive season will be a little more expensive to pay off,” says Habana.
Here are Habana’s tips for managing money over the holidays:
1. Don’t neglect your budget
Work out what your income is over December, and what your expenses are based on last month’s bank statement. After that, you can budget for the festive season with what’s left – safe in the knowledge that you won’t miss any payments or have to go into debt.
2. Make a list and stick to it
Decide upfront what is required for your household, and write that down. Check out prices online or in the local community newspaper ad bundle – there will always be specials inside the pamphlets that make up the bulk of the paper. That way, you can put a price against every item and determine what you have left over for items you want or need but are not absolute necessities.
3. Shop online
If possible, take advantage of retailers that offer to deliver your groceries to your door, at no charge. Most grocery stores now offer online shopping and same-day delivery. By shopping online you are more likely to only buy what’s on your list, rather than walking up and down the aisles, being tempted by, well, everything…
4.Don’t leave it to the last minute
A last-minute shopping expedition often means paying higher prices, especially if you have to dash into a convenience store. Stock up on specials whenever they fit into your list and then remember to use them. There’s no point having hundreds or thousands of rands of groceries sitting in a freezer or pantry.
5. The gift of giving
While there is little that is more satisfying than giving a gift to someone else and seeing their face light up, you can introduce some ‘rules’ within the family that will prevent everybody from being out of pocket come end-December and in trouble at the end of January. One may be to not give gifts to the adults, which is particularly helpful in large families with lots of in-laws and children. Another may be a Secret Santa way of giving: every adult draws a name and only gives to that person. A third option is to find a cost-effective way of giving a bit of yourself without breaking the bank, such as doing a painting for friends.
6. Use your rewards
Many retailers and banks offer a rewards programme. It’s well worth signing up for these at the beginning of the year and taking advantage of the accumulated points when it comes to the festive season. Don’t worry if you haven’t already signed up, do so now so you can benefit next year.
7. Don’t borrow
As tempting as it may be to reach for that little plastic credit card or borrow money and then having to pay interest, the reality is that if you can’t afford it, don’t borrow for it. If you really need some extra cash, rather chat with your employer about responsible early access to wages. This way, you receive wages you have already worked for and don’t owe money to either the formal financial institutions or loan sharks.
8. Teach the kids about money
If things are a bit tight at home, use the festive season as a learning opportunity for the kids. Teach them about the gift of giving and showing appreciation for the small things. They are never too young to learn and it is a gift they will carry with them throughout their lives.
9.January is coming
All your budgeting, lists, and planning should take into account what is often a forgotten month: January. January frequently seems to have six weeks in it because many companies pay salaries in the middle of December. On top of that, January means back-to-school uniforms, books, stationery, and the lot, which has to be paid for out of December’s salary, which has often already gone to festive season spend.
10. Refresh that budget
A new year is approaching, which means a year filled with new possibilities. It’s time to relook at your budgets and realign them with your new and improved financial goals. Having a physical budget that you can look at helps you visualise your expenses and identify opportunities to potentially save.
“As the saying goes, ‘a goal without a plan is just a wish’ With a bit of planning, you can avoid the festive season debt trap and enter 2022 feeling more in control of your finances and ready to tackle the new year,” says Habana.