Save money during the festive season

The festive season is a time for giving, exchanging gifts and sharing meals with those closest to you. However, for many people, this means that this is the time of year when they spend the most on material goods.

“A large number of people start off the new year in debt due to excessive spending over the festive season and this has a ripple on effect for much of the year ahead,” said Bruce Fleming, a certified financial planner.

Read How to budget for your wedding

You can avoid the year-end debt spiral by ensuring that you don’t buy anything on credit, as this will definitely add to your ‘debt hangover’ for the new year. Studies have shown that people find it more difficult to part with cash as opposed to using a credit card, so using only cash could be a method of discouraging you from unnecessary purchases.

Preparation is key to ensuring that you manage your finances well during the holidays. Before buying gifts, always plan before you go shopping. “There are basic golden rules to shopping smart during the festive season,” said Fleming, these are:

•  Compare prices and only settle for the best price, ignoring brand names
•  Before you do your Christmas shopping, decide on a budget and more importantly, stick to it
•  Make a list of everything you need to buy. If it’s not on the list, don’t buy it.

Many people receive bonuses in December and with all that extra cash in your bank account, it can be very tempting to buy whatever catches your eye. People generally view their bonus as extra cash they should spoil themselves with. Instead of splurging on something you don’t actually need, consider doing the following with your bonus:

Save some money for a rainy day

• If you do have a retirement annuity, consider putting 15 per cent of your bonus into this saving to bolster your retirement savings
•  Put some money towards your most expensive debt, for example, personal loans or credit card debt
•  If you are paying for a home or car, consider putting some money towards your bond or car repayments. The extra cash injection could help you pay off your debt, sooner.

“Poor financial management during the festive season can cause big problems for consumers going into the new year. If you don’t start planning for your year-end purchases and spending, you will end up overwhelmed with debt long after the festivities. Without the financial discipline, you may be tempted to buy items [sometimes very expensive ones] purely because they are on sale.”

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