How to avoid financial stress this festive season

By Jessie Taylor

The festive season is a time for celebrating with loved ones – but these celebrations can often cause financial strain on families. The period is associated with the creation of debt, as many South Africans extend themselves financially. And after more than 18 months of economic downturn, many citizens may find themselves yielding to the temptation to borrow.

However, there are ways to stretch your hard-earned funds without putting yourself in debt this festive season.

Financial traps

Research ahead of the 2020 festive season estimated that South Africans would spend around R200 billion – or roughly R5 706 per adult. This amount is more than a third of the average South African citizen’s take-home salary.

The survey found more than three-quarters of respondents say they spent more than usual over the December period, with food and drink their most considerable expense. The average South African household spends an estimated 50% of its budget on food and beverages. Travel, both commutes and holiday trips, also ate up a large chunk of the respondents’ budgets, followed by gifts.

But this year, with steep increases in living expenses due to the economic downturn caused by the global pandemic, coupled with job losses, many South Africans may find themselves unable to meet the demands of the festive season.

Last festive season, 47% of South Africans said they were financially worse off than the previous year – something they attributed to the pandemic and resulting lockdowns. Only 20% said they had remained in the same position financially compared to the previous year.

One of the biggest financial dangers consumers face over the festive season is the allure of credit. South Africans already have significant debt, with consumer debt standing at R1.9 trillion this year.

Over the first quarter of the year, first-time defaulters made up an estimated R20.4 billion. Those defaulting on their loans for the first time appear to have spent over Black Friday and the festive season last year. The report found that people struggled to keep up with their payments related to the increased economic activity following the easing of strict lockdowns towards the latter part of 2020.

Five tips to avoid overspending this festive season

Many people struggle to manage their money over the festive season, falling into the trap of making debt. Try these tips to make your hard-earned money stretch.

1. Budget: Setting a budget will help you establish what funds you have to spend and allow you to prioritise what you’d like to spend them on. Setting out a budget at the start of the festive season is just the first step, though. It’s best to regularly compare your spending against your budget to ensure you’re still on track and adjust if you’ve overspent in one area.
2. Shop smart: Start shopping for gifts early, as prices often increase once the festive season hits. Ensure you compare prices before buying to make sure you’re getting the best deal. And if you need a household or personal item, try to wait until after the festive season when you could benefit from clearance sales.
3. Set aside savings: Consumers often only feel the effects of their festive season spending in January, when they have to pay household accounts and school fees. The start of the year always brings expenses, especially if you have children in school who will need stationery and uniforms. Try setting aside money for the start of the year before allocating funds to your festive season.
4. Gifting guides: Buying gifts can be a significant drain on your pocket. One of the easiest ways to manage gifting expenses is by determining how much money will be spent on gifts and drawing that out. Keep this money in a sealed envelope, and it will help you shop for gifts that fit into your budget.  Ensure you spend wisely and purchase only gifts that your loved one wants to avoid wasting your money. If you’re at a loss for gift ideas, consider making a donation on behalf of your loved one or giving them a gift voucher. Alternatively, consider giving gifts only to children as a family – this will save the whole family some money.
5. Avoid debt: It’s tempting to buy on credit over the festive season, but this can hurt your pocket in the long run. Many deals encourage you to buy on credit over the festive season, but the interest is often high, and you end up paying far more than if you’d bought the product outright. If you fail to make your repayments, you could have your assets repossessed or be blacklisted.

The financial stress that comes with repaying this debt can not only affect your pocket but can impact your lifestyle and mental health – making managing your funds over the festive season a priority rather than a luxury.

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