With many of us preparing for the festive season, there are five things to consider to avoid the real possibility of returning from the holidays with empty pockets.
While December is certainly exciting, there is also good reason to approach this season with a measure of caution, given that the economy’s performance has not been as robust as before.
While we are certainly living in tough times, there are ways that consumers are able to still enjoy the holidays and festivities with family and friends while curbing excessive consumption through a course of careful planning and disciplined spending.
Sharon Coppola, Senior Executive: Risk and Compliance at Experian South Africa offers the following tips to avoid the debt-trap this festive season:
(December) Holidays are not an excuse to go on a spending spree
Early salary pay-outs should be approached with extreme caution. Often enough many consumers forget that this needs to stretch up to 40 or more days until the end of January 2017! Budgeting is certainly one way of curbing this – and can be achieved by keeping a log book to track all expenses such as every shopping and grocery trip. This exercise can help you to steer clear of excessive spending and keep your bank balance healthy come the January paycheck.
Understand your monthly instalments
Before purchasing on credit this festive season, be sure that you can afford the monthly installments. When applying for credit, ask the credit provider to show you how much you will pay each month. Calculate how much you can afford to spend on a monthly basis and do not exceed it. You want to avoid falling into arrears on your repayments in the New Year as this will have a negative effect on getting access to credit in the future.
Check your credit record before spending
If you need to purchase goods on credit, check your credit report first. This provides you with an indication of your credit status. Being familiar with the information on your credit report can help you to plan your purchases and spend accordingly – and ultimately ensure that you stay within your credit limits. Remember, your payment behavior, including any late or missed payments, are recorded on your credit report and may have a negative impact on your ability to access further credit. Furthermore, checking your credit report is also a way for you to keep an eye on your existing credit accounts so that you can identify any unusual activity, and ultimately protect yourself against identity theft, which often increases over the busy festive season.
Debit not credit
Make a habit of using your debit card instead of your credit card for everyday purchases. That way you can make sure you don’t over-extend your credit this festive season. The simple rule should be: if you don’t have the cash available, you can’t have the item.
Keep an eye on sales
For those who don’t want to miss out on all the frills and trimmings of the festive season, there are ways around this while still keeping your budget in good shape. The trick is to keep an eye out for sales. Often enough stores offer sales from groceries to clothing to gift ideas. Keep an eye out for sales announcements and promotions in your local community newspaper, radio station or on television. Also remember that the January sales are right around the corner.
“December is an opportunity to take a step back and plan. This puts you in a better position to define your financial goals for 2017. It will also help you to keep your spending in check from an early stage so that come January, you are ready to pursue your financial goals with minimum debt and enough to survive the longest ‘month’ of the year,” ends Sharon.