Keep a grip on your budget this festive season

The festive season is almost upon us – a time of giving and a time of buying.

The pressure to overspend is officially on.

Planning and budgeting is key to avoid getting into debt over this period.

Legal and Tax would like to encourage you to consider how much you can afford to spend and to stick to your budget to prevent unnecessary debt.

While credit-hungry South Africans are in dire need of a robust culture of saving, they also need to be educated about the pitfalls of giving in to easily accessible credit they simply cannot afford.

The festive season is a particularly vulnerable time for all income brackets and consumers have to remember the demands of going into a new year.

The Consumer Financial Vulnerability Index indicates that the pressure on consumers’ cash flow has remained consistently high throughout 2014.

International and domestic uncertainties, as well as disruptive events such as labour strikes, contributed to dampening income levels and negatively affect consumers’ cash flow decisions.

“It seems like South Africans cannot stop spending more than their income, while inflation grows and interest rates rise.

“This becomes even more evident over the festive season, while they should rather be setting aside money for the new year’s demands,” said Chantel Cronje, legal advisor at Legal and Tax.

Many people begin the New Year broke.

Legal and Tax provided a few tips on how to save and stretch your hard-earned money and not get too carried away by the spirit of the season.

• The festive season is a time of specials, but try not to think SALE – always think SAVE.

A word of advice: pay the price advertised.

According to the Consumer Act, suppliers must charge you the amount advertised or reflected on an item, so check the price at the till before paying, or double check your receipt.

• Remind yourself of what your needs are and don’t confuse them with your wants.
• If you are a property owner with an access bond, transfer your full year-end bonus into the bond and take out money only as and when needed.

This will have a positive effect on the interest you pay on your bond, and also assist with that extra bit of self-discipline required in curtailing spending your bonus.

• If you are not in the above position, transfer your bonus into a bank account other than where your normal salary is deposited – there are several low-cost savings account products offered by banks.
• Budget for things you know you will have to pay in the new year, like school fees and uniforms.
• Calculate your budget for January (groceries, transport, entertainment, etc.) and make sure that you leave that money in your separate savings account. Also set aside a sum for emergencies.
• We are all tempted to spend more money when we are on leave than during normal, working periods. If you, therefore, are not going away for your annual holiday, try to make sure you do not spend more than you would in a normal month when you are at work.
• Service your debt and stick to the payment terms. If you cannot service your monthly debts discuss your situation with your credit providers before it is too late. Always contact your credit providers proactively with a payment arrangement plan before they contact you.
• If you know you lack self-discipline, pay extra into your accounts when you receive your bonus.
• The festive season is a time of giving, but most gifts will be long forgotten halfway through January. Don’t regret those lavish gifts you bought in January when you have to pay school fees.
• If you are at home with children look for low cost alternatives to keep them busy – consider a picnic rather than visiting the mall, or DVDs and popcorn instead of going to the cinema. And, while visiting the zoo is no longer cheap, it can keep anyone occupied for the whole day. Save money by taking a back pack with snacks.
• You can even occupy your children by helping them to make decorations and gifts – the personal touch makes it more special than a store-bought item.

If you are already battling with debt, speak to your creditors about possibly restructuring your repayments.

If you’re in a debt crisis, you might want to consider entering a debt counselling process.

Debt counselling is a legal process that involves having your debt restructured so that you can pay household expenses and still be able to pay off debt at a reduced instalment at the end of the month. Contact an authorised debt counsellor, such as Legal and Tax, to find out more about how debt counselling can help you take control of your finances again.

For more information on Legal and Tax visit www.legalandtax.co.za