Avoiding financial ruin this festive season
Coming to the end of a financially tough year for many South Africans having experienced a series of significant price hikes of basic goods and going into the festive season where expenses run high, presents as a challenge for many.
“Most people struggle to contain their spending over the festive period and, unfortunately, some also make vital financial mistakes which could have a long-term negative impact on their financial wellbeing,” said Ester Ochse, channel head at First National Bank (FNB) Financial Advisory.
“The most common scenarios are that people who have some budget to spend tend to over-stretch it and those who do not have any budget often sacrifice in areas which could potentially ruin their financial position,” explained Ochse.
Even though recovery from financial blunders is doable, it often takes a while for people to regain their position.
Osche makes mention of the following financial pitfalls to avoid this season:
Skipping debit order payments
“Most people exploit the convenience of getting their salaries early in December by withdrawing every cent, leading to unpaid debit orders. Do not make the mistake of withdrawing every cent to finance your festive season spending at the risk of your debit orders not being honoured,” said Osche.
This could not only see you having to make double payments the next month but it is also a bad reflection on your credit record.
Taking on debt to fund entertainment
Avoid incurring debt to fund entertainment activities this season.
“Any debt you take should go towards financing a worthy cause such as renovating your home or supplementing non-negotiable costs such as school fees,” suggested Osche.
Using money reserved for school fees
Exercise discipline and avoid tapping in to money you have tucked away for school fees or other planned for expenses next year.
“Do not ‘gamble’ with your child’s prospects by using funds which are reserved to pave a better future for them,” added Osche.
Cashing long-term investments
It is almost never wise or advisable to cash in long-term investments in order to fund festive season spending. The time you will have to take and put into recovering that investment is not favourable.
“If you believe that now is rather late to start budgeting for your festive season spending, review your plans to align with your available budget. Better financial planning ahead of, and discipline during, the festive season will certainly put you in a better position ahead of the New Year,” stressed Ochse.