Between all those party invitations and gifts to buy for family and friends, the urge to splurge is at its peak in the run-up to the festive season.
To avoid breaking the bank before the New Year even begins, consider these useful tips from Carl Fischer, chief executive for marketing and corporate affairs at Capitec Bank.
Tip: Check your debt-to-income ratio here.
1. Draw up a budget
Few of us would dare attempt our Christmas shopping without at least a basic list, but it's equally important to take into account all holiday expenses – from gifts to travel, food and accommodation. This means you need to work out what you can afford before you spend.
If you count on your bonus or thirteenth cheque for your holiday funds, remember to factor in January's expenses, such as groceries and school fees - otherwise you run the risk of running out of money in the New Year. Budgeting will also help prevent your debit orders from bouncing, and thus avoid incurring additional bank charges.
2. Cash versus debit versus credit
With theft generally at its worst over the festive period, a debit card is safer - and more convenient - than carrying cash. And, because the money is immediately debited, it automatically stops you from spending more than you have.
Cash offers the spend-limit benefit to an even greater extent, since you can bring a set amount and end your shopping when it’s been depleted.
A credit card, on the other hand, is useful for larger purchases, such as a family holiday or an expensive gift. The downside is that you will be charged interest on the amount you borrow if it’s not settled within the interest-free period. This could end up costing you a lot more than the item prices.
3. Regularly check your bank statements
Unauthorised charges and reports of lost or stolen cards increase significantly during the holiday period, so it's important to regularly check your account and report unrecognised transactions immediately.
Online banking is not only the fastest way to review your account, it’s also the most secure.
4. Drawing cash
The most affordable way to draw cash is at the till of selected retail stores such as Pick n Pay. The next-best alternative for avoiding expensive fees is to use your own bank’s ATMs.
5. Empower your kids
The festive season is a great time to educate your kids about money. Whether they've already started saving or they are receiving a holiday allowance, help them plan their own Christmas shopping budget. This will teach them about the cost of living and encourage financial responsibility.
4. BYO (bring your own)
If you want to entertain family and friends but you need to sidestep the hefty price tag, consider hosting a potluck dinner where each guest is asked to bring along a dish for the meal.
Besides saving money, potluck dinners are a real time saver when it comes to shopping, cooking and cleaning up.