Year in and year out, spending over the Christmas and New Year’s period clearly indicates how easy it is to fall into temptation and overindulgence. Endless parties, shopping sprees, last minute gift buying and get-aways all amount to often uncontrolled and impulsive spending.
The issue of access to credit has received lots of publicity in South Africa since the promulgation of the No. 34 of 2005: National Credit Act, 2005 which was designed to protect consumers more than limit them, ensuring that the allure of spending without immediately parting with cash is lessened and that more consumers are not enslaved by debt.
For many, racking up a small amount of debt into the New Year is seemingly unavoidable particularly in an economy that is already burdened by the cost of living.
But being ‘good’ is the only way to ensure that you really do get what you want for Christmas and the benefits of a well-planned budget and conscious spending should be at the top of every consumers list. The first step to making sure you survive the financial strain of the festive season is to be responsible and aware of your existing financial commitments.
Often consumers find themselves ignoring monthly bills in place of funding the holidays but this can only have dire consequences in the months to follow, resulting in double payments and a negative impact on credit ratings that can last well into the New Year.
South Africa has about 18-million credit-active consumers and statistics published by Compuscan, a South African credit bureau, earlier this year showed that the payment profile of 11.7% of updated and active accounts worsened over the 2010 festive season.
The survey further revealed that young women suffered the most from Christmas bingeing in comparison to their male counterparts, although both men and women showed negative payment behaviour over the festive season. Specifically, 10.8% of accounts belonging to men and 12.5% of accounts belonging to women worsened over the festive season.
Reports for 2011 were a clear indication that consumers were feeling the pinch of rising food, fuel and general living costs and were conservative in their spending habits.
For some consumers, taking advantage of cheaper online shopping deals was a way to stay within budget over the last festive season.
Some consumers also took advantage of points they had accumulated in the course of the year from loyalty programmes they belonged to and used these points to buy gifts, testimony to another smart way to ‘save’ and spend over the festive season.
While actual purchases on items come at a high cost for most consumers, the last quarter of the year is filled with social engagements; catching up with friends and family, year-end functions and time off make it even more difficult for consumers to stick to their normal spending patterns.
Choose restaurants and venues that have good specials, reasonable prices and make use of bulk buying deals and discounts offered. Entertaining at home is also an option which if organised well and budgeted for in advance, lends itself to being more affordable and guilt-free when it comes to cost.
Take advantage of Christmas specials but do not be wasteful, buy only what you need and do not get caught in the trap of bulk buying if it is not necessary. Shopping in advance will also cut down on spending impulsively or paying more for convenience.
Asking your guests to make a contribution towards drinks, desserts or special items will not only inspire a feeling of togetherness, but also make entertaining more affordable, particularly in large crowds.
Impulsive spending can not only lead to waste but is usually easy to overlook when spending on store cards because you don’t have to part with cash.‘Buy now, pay later’ deals usually omit the fine print which would read something like ‘pay later and for much longer than you had intended.’
Do not overlook the interest that accumulates when spending on store cards, while it may seem like a small monthly fee, over months and sometimes even years it adds up and erodes cash reserves.
If you are fortunate enough to get a thirteenth cheque or a bonus payment, you should give careful consideration to how you spend it or ideally, save it.
Paying off debt first is always first prize and putting the remainder into savings is a good way to ensure that you in fact, use the additional money wisely.
Consumers should start their credit diet as soon as the Christmas decorations go up. Together, they amount to a number of ways to avoid the financial hangover of the festive season’s bingeing.
