Splashing out over the festive season as a reward for making it through 2020 might be tempting, but some restraint could ensure the Christmas cheer lasts into the new year.
According to the National Debt Counselling Association (NDCA), many South Africans’ festive season shopping sprees result in them skipping December debt repayments.
It anticipates that this trend will be worse this year because of the economic impact of Covid-19.
Also Read: VIDEO: Top 10 gifts your pet will actually like
Shafeeqah Isaacs, head of financial education at financial services provider DirectAxis, said:
“After a terrible year you may feel that you deserve a little spoiling. The problem is that there are long-term consequences to overdoing it and not having enough money left to pay your debts,” he said.
The NDCA reports that historically, on average, it takes up to two years for consumers to catch up on payments that are missed in December.
Given the perilous state of the economy, it’s now likely to take longer.
“Unfortunately, what many people don’t consider when they skip payments is the negative impact on their credit score.
“Your credit score tells banks and other financial services providers how reliable you are.
“A poor credit score could mean they either won’t lend you money or they’ll charge you higher interest to offset the risk.”
Also Read: Watch: Top 10 gifts for gamers
The link can be used to check credit score for free: https://www.directaxis.co.za/pulse
Something else to consider is that many companies pay employees early in December.
This means you may need to live on your December pay cheque for up to a month-and-a-half before your next salary payment at the end of January.
“In the past, a Christmas bonus may have made it easier to make it through to the end of January, but this year a lot of employers won’t be paying a 13th cheque.”
Shafeeqah and some of her expert colleagues at DirectAxis have put together a few simple tips to not over spend this Christmas.
• Decide what you can afford to spend before you start shopping. Make a list of all the festive season expenses such as gifts, entertainment and travel and how much you have for each.
• Do your homework before you shop. When you’ve decided who you’re buying for and what to get them compare prices.
• Because this year we need to keep our gatherings far smaller, don’t be shy to ask for contributions. Most people, especially family, won’t mind being asked to bring something to a small festive-season celebration.
• Stay on top of your spending. By keeping an eye on what you’re spending as you go and making sure you’re more or less sticking to your budget, you should be able to avoid running into trouble before your next pay cheque.
“Some sensible planning ahead of the festive season will save you money over the holidays and importantly will mean that you start 2021 on a sound financial footing with your credit score intact,” said Shafeeqah.
Follow us on: 
