Avoid a post-festive season debt hangover

Avoid a post-festive season debt hangover

Growth in retail sales volumes are already higher in the fourth quarter this year than they were in the same period last year, according to the results from Stellenbosch University’s Bureau for Economic Research’s latest festive season retail survey. These results indicate that despite tougher economic conditions, South Africans are flocking to the malls over the festive season.

Those who receive a year-end bonus or 13th cheque should aim to save a portion of it and shop with caution this year. While the extra income is always welcomed during one of the most expensive periods of the year, those receiving a year-end bonus or 13th cheque can easily find themselves overspending and incurring unnecessary debt.

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.

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 2015 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 separate 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!