Creating harmony between spenders and savers
South Africans collectively owe about R1.73trillion in debt and, although there have been signs of improvement, the urge to splurge could cause more credit spikes this summer - which makes it more important for families to have this sometimes awkward money-management chat.
Danelle van Heerde, head of advice processes and tools at Sanlam Personal Finance, says there’s no reason to wait out the holidays before families and partners have frank conversations about their spending preferences. On the contrary, she says turning a blind eye to the differences in how we either spend or prefer to save can lead to a lot more stress further down the line.
Decide on your budget. Look at your past bank statements, think of the big payments you still need to make (bond, rent, student loans, etc) and keep your savings goals in mind.
“There’s nothing wrong with either being a spender or a saver - both have their strengths. Moderation is key, though. If you’re too frugal, you may forego investing in things that could add real value to your life. If you spend too liberally, you could end up using debt for day-to-day expenses, which may damage your finances in the long-term. Learn from one another and stick to your plan.”
Here are some saving tips:
* Be smart about your bonus. If you’re lucky enough to get an end-of-year bonus and feel comfortable doing so, discuss it with your partner and decide what you’ll do with it together. The saver may want to invest some of it in a “holiday” savings account. The spender may want to use it to spoil special people. There’s merit to both.
* Keep some money separate. This is important. Each partner should have some money completely independently. It’s their prerogative how this is saved or spent.
* Find positive uses for your spender’s special talents. Set him or her challenges such as a budget of R500 to source thoughtful gifts for five friends.
* Reflect on what the holidays are all about. Family, friends and spending time together. Challenge yourselves to come up with activities that don’t involve spending much or any money.
* Do the DIY thing. Home-made, thoughtful gifts are often the best. Plus, there’s plenty of inspiration on Pinterest so you won’t find yourself short of ideas.
* If you have children, use the holidays as a teaching opportunity. Be open and tell your child how much you have to spend, what you’re planning to spend it on and why.
* Track your expenditure. And try not to hide anything from your partner. Keep each other accountable to the budget that you created together. Be very intentional about any money that you spend - small amounts tend to add up fast.
* Avoid debt.
* Discuss presents for each other upfront. If a saver splurges on a spender and a spender suddenly decides to go frugal on gifts for a saver, a few issues may arise.
Rather set a budget, so that you’re both on the same side of the wrapping paper.
Supplied by Sanlam Personal Finance