Avoid a post-festive season debt hangover

Avoid a post-festive season debt hangover

Since the outbreak of COVID-19 at the end of 2019, the South African retail market has seen some interesting changes.  

In 2019, the online retail sector had grown only slightly to reach a market of only 2%. However, in 2020, the outbreak of the global pandemic and the implementation of a national lockdown caused online sales to increase to roughly 40%. 

However, even after this increase in online retail sales, South Africa’s retail industry shrank by 2.7% between September 2019 and September 2020 and with the ongoing threat of COVID-19, we need to be cautious with money now more than ever.  

Draw up a budget for your Christmas spending

Budgeting and constant tracking of what is spent, especially on incidental purchases like a quick lunch while shopping, is essential during the holiday period in order to avoid overspending. By drawing up a festive season budget and tracking what is spent, you’ll be able to plan and manage holiday costs to prevent yourself from overspending. This will enable you to have more money available for the things that you really need during the festive season. 

Pay yourself first, and settle any debt

Think ahead! As most people are often paid earlier in December, overspending can quickly put strain on January’s monthly budget. Instead, why not use the extra money to pay off any existing debt before spending it elsewhere. Whether the money goes towards a credit card, personal loan or in-store account payments, it will be extremely beneficial down the line to start the new year with a clear or lower credit balance. 

Also, it’s wise to think about spending the extra money on items that will bring real benefits in the New Year. We should use bonuses to pay for essential items such as; tyres for a vehicle, school fees, gym or club fees, or even paying off clothing accounts. Not to mention how a 13th cheque can also prove to be a great booster for an emergency or rainy day fund. A recent Wonga customer survey revealed that only 31% of the respondents have a seperate savings account for an emergency expense. Many financial experts recommend that consumers have at least three months’ worth of income in an emergency fund, therefore a 13th cheque is the perfect way to start to building or strengthening an emergency fund. 

Most importantly, we need to be sensible by being aware of the money we spend. The festive season is about spending time with family and loved ones. So, if you do plan on going on a spending spree, make sure that this doesn’t leave you with a post-festive season debt hangover!