Your guide to financially surviving Christmas

By Danielle van Wyk

There are a few times each year where you need to dig deeper into your pocket and spend more money such as birthdays, anniversaries, and the Christmas period.

Whether you celebrate this religious holiday or not, the festive period - depending on how you choose to spend it - means increased travelling, buying of gifts, entertaining, and eating out at restaurants.

If you have not budgeted properly or planned for all the extra expenses, you might be caught financially off-guard.

Justmoney identified some of the best ways you can enjoy this holiday without running into any financial trouble in this easy-to-understand guide.

1. Navigating your insurance over the festive period

While the festive period is one of the most expensive periods, it could become even more expensive if you do not have the correct insurance cover in place. This means ensuring that your premiums are paid up and that you have the right cover for your needs.

As the year progresses things change - maybe you have done a few home improvements, or you have bought a new car. Either way, it is essential that as you and your needs grow, your insurance does as well. It is important that you are always covered at every phase of your life.

There are key areas that specifically require your attention when it comes to your insurance. These include home insurance, vehicle insurance and life insurance.

Home insurance

When it comes to protecting arguably your most important asset there are a few general rules of thumb.

If you do not already have home insurance, ensure that you make it a priority this season. Ensure that your insurance premiums are paid up. And lastly, re-evaluate your cover to assess whether this specific policy is still the best one for your needs. Underinsuring your property and its contents can see you having to fork out much more than you may have, should disaster strike.

Over the festive period the chances that you may be going on holiday are high and this leaves your property exposed. The risk of possible damage to your property or a break-in while you are away is increased.

This is not to say you should simply avoid going on holiday, but rather that there are a few ways in which you can safeguard yourself when you do:

Building insurance

This is one of the most important policies you will purchase.

It covers the structure of your home and its permanent fixtures and fittings in case of unexpected events, such as fire, floods and lightning. If your geyser bursts, whether you are at home or away, this policy will cover the costs of repair and damages.

Contents insurance

Apart from protecting the structure of your home, the contents are vital too.

Valuable assets inside your home, such as your television, kitchen appliances, and computers are covered in the event of theft, water or fire damage. It is important to do a realistic valuation when you request an insurance quote, because if you undervalue the contents, there will be a shortfall in your pay-out.

Liability insurance

If your friends or family are visiting or you are entertaining at home and an unforeseen incident occurs, this type of cover protects you for up to the amount insured.

Other helpful add-ons can provide additional cover against power surges. This covers the fridge, freezer and other electrical items such as electric gate motors and electric fencing while you are away from home.

While the above is particularly important to have in place while you are away, it should also be investigated even if you are planning on spending the holidays at home.

It is also important to update your insurance on any details that may have changed to maintain full transparency and disclosure. One such example is that you may have declared a home alarm system on inception of policy. Ensure that this is in good working condition before you leave home as you claim could be repudiated if you do not keep your end up.

Vehicle insurance

In the rush to start the festivities, many people often forget to ensure that their motor vehicle is protected, especially when tackling long distances.

Another consideration is the increase in traffic over the festive period which invariably leads to a higher number of road accidents. Therefore, if you are planning to take a road trip, it is your responsibility to prepare for any potential risks by effectively insuring your vehicle.

Ensuring you have the policy in place is the first and most important step. Then, ensuring that your insurance premiums are paid up is the next. And lastly re-ensuring you have the best cover for your needs is vital. This may mean having to shop around to find the best price.

But apart from making sure your insurance is up to date and effective there are other things that you need to tick-off before buckling up. These include:

Get your car serviced

Nothing ruins a holiday like a car failure or a breakdown along the way, so it is important to make sure that your vehicle is inspected, prior to departure. Having an authorised dealership or auto-repair shop, that your insurance recognises, give your car a thorough service is one of the best gifts you can give yourself and your family this season. Special attention should be paid to mechanical and electrical systems, as these tend to be the costliest to repair.

Oil and water checks

It is important that you keep tabs on both your oil and water, as a lack of either can cause significant damage to your engine. Damage to your engine is probably the most financially devastating vehicle failure you can experience. In most cars, by the time the oil light comes on, the engine has already been compromised, so it is vital to monitor this.

Tyre pressure

Correctly inflated tyres are not only a safety requirement but can also improve fuel efficiency by about 4% on average. It is also important to bear in mind that, should you be carrying a heavy load, you will probably need to pump them up a little bit more than usual. If you are unsure of the correct inflation pressures, look on the inside of the driver’s door or under the fuel filler flap for a tyre pressure chart. 

Get tracked

Serious accidents can leave us incapacitated and unable to call for help, which is why a tracking device for your vehicle could make a critical difference to your road trip this year. Apart from being a plus when taking out an insurance policy because it may signal lower premiums, these devices can automatically send an emergency notification to your insurer should you find yourself in an accident. Be sure to check that your insurance cover also includes ambulance services and towing before setting off, as this could save you a lot of money in the long run.

Stay alert and buckled up

In many instances, backseat passengers tend not to make use of a seatbelt, particularly when the young ones are overexcited. Yet, the reality is that they are just as much at risk as their front seat counterparts. Therefore, do not make buckling up an adults-only priority this festive season. Also take regular breaks to ensure that you are able to refocus for the next part of your journey.

Life insurance

While the idea of being prepared for your death seems terrible to think about during this time of celebrations and family, it is important.

Life insurance plays a very important role in protecting your loved ones from financial hardship in the event of your untimely passing. With increased traffic on roads and the unfortunate reality of increased drunk driving incidents during this period, having your life cover in order can be the best gift to your family.

Sure, it is not a gift you can neatly package with a bright red bow and put under the Christmas tree, but it is something that will define the rest of their lives if it is not there when needed. This especially if you are the primary breadwinner and have financial dependents like a spouse or children.

Other benefits include:

  • The provision of cash for dealing with the adverse financial consequences of the insured’s death.
  • Life insurance enjoys favourable tax treatment.
  • Death benefits are generally income-tax-free to the beneficiary.
  • Death benefits may be estate-tax free if the policy is owned properly.
  • Cash values grow tax deferred during the insured’s lifetime.
  • Cash value withdrawals are generally income-tax free.
  • Policy loans are income-tax free.
  • A life insurance policy may be exchanged for another life insurance policy (or for an annuity) without incurring current taxation.

If you don’t already have it in place, consider gifting yourself with life insurance this season.

2. Should you take out a loan to survive this season?

The short and responsible answer is no.

But it won’t be fair to acknowledge that the temptation is great. Often around this time the pressure to keep up with the Joneses when it comes to Christmas lunch, where to spend your holiday, gift buying, and entertaining has increased.

This is also egged on by loan providers promising you fast cash, often without even checking your credit.

The catch? These loans are often payday loans in disguise. Meaning your interest rate will be well into the triple digits, and you will have to pay back all the money, plus interest, in a few weeks or months.

You will also have to allow the lender access to your bank account to collect payments, this leaving you vulnerable to costly overdraft fees if you do not have the funds ready.

Sure, you may be thinking that your credit score is decent and you will receive a good deal, but even if your credit is average, this remains an overly expensive option.

Others try and outsmart the system by doing their homework regarding loan providers and offerings and opting for structured personal loans. Even so, experts agree that a personal loan should never be used as a “tide-over” mechanism.

This means that personal loans should not be used to make ends meet or for buying food and entertaining. It simply is not worth the spend and at the end of the season you typically have nothing to show for it besides hefty repayments.

Instead, a personal loan is meant for large, one-time expenses like a kitchen remodel or a wedding or emergency medical expenses that are outside of your medical insurance coverage. As a guide avoid using personal loans for anything that you typically could have saved up for over a few months.

Unlike the ugly sweater your aunt gave you, this loan can’t be hidden away. In some cases, you could still be paying off this Christmas when the next holiday period rolls around as structured personal loan repayments usually span across two to five years.

Other reasons to avoid a personal loan this Christmas include:

  • Payday loans and personal loans affect your credit score and having too many on your record could be the reason you may be denied credit in future.
  • It adds to your financial burden. It may be extra money in your pocket now but come month-end when it’s time to pay the piper you will have one extra repayment to afford.
  • It can delay your financial goals and progress. Typically, when it comes to the end of the year it is a time of introspection, reflection and planning. For most a goal is to lighten their debt load. Taking on more debt is counter-productive and can set you back in the long run.

Christmas is an expected expense, yet one we hardly save for. Make the effort and commitment to save for additional festive expenses in the lead up to Christmas and avoid the financial stress.

Gift yourself with financial health this year and avoid taking on more debt. As a South African citizen, you are entitled to one free annual credit check, so get yours through Justmoney.

3. Are you heading into the holidays with debt?

So, the holidays have not even begun, and you are already caving under a heavy debt load. The year has been long and while you may have started out bright-eyed and determined to make better financial decisions, somewhere along the way you may have gotten lost.

It is easy to over-spend on gifts for friends and family and getting yourself into debt or even worse – increasing your existing debt.

Instead of continuing with the immense pressure of your debt in addition with the pressure of having to make Christmas happen for your family, why not take a load off?

How? Getting the necessary assistance to rehabilitate your debt. Unfortunately, many South Africans do not recognise they need help until it is too late.

Here is a good way to check if you are in need: 

  • You are bankrupt
  • You are being harassed by lenders
  • You are unable to make monthly repayments in a timely manner
  • You are overburdened by debt and wish to be debt-free again

What are the benefits of debt counselling?

  • Your debt will be restructured so that you can afford repayments. Debt restructuring will also consider all your expenses as well as your monthly income.

  • A counsellor will set aside a certain part of your income for food, transport, bills and other necessities so that you are able to still function. The remaining money will be spent on paying your debts.

  • A counsellor will simplify financial management for you. The counsellor will explain how you can cut your monthly expenditures to live a comfortable life, without loans.

  • Banks and other lending agencies respond more positively to registered debt counselling companies. These institutions will negotiate with your lender to ensure you get reduced interest rates and better debt repayment terms.

  • You will have to make only monthly payments to your debt counselling company. They will pay all your creditors. Besides making payments simpler, this also reduces your banking fees.

  • Lenders will not hound you because the counselling agency will legally protect you.

Financial stress, much like any other type of stress, can consume all your thoughts and keep you awake at night. So, the sooner you reach out to a trusted debt counselling provider, the sooner we can assist your situation, and plan to help you back on your feet again.

How to save this season

There are many ways to save during this period. Yes, being able to walk into a shopping centre and swiping your card or hosting and attending parties every other weekend is fun, but can you afford it?

For most, if you are being honest with yourself and unless you have saved, the answer is no. This does not mean you are not entitled to any Christmas cheer this year. Justmoney came up with a few ways in which you can still enjoy the season without breaking the bank.

Draw up a budget: This may seem tedious but being realistic about what you are able to spend and sticking to it, is vital if you want to save money. This extends to everything from gifts, Christmas lunch shopping and general food spending, to holiday activities and outings. Spending according to a list will prevent impulse buying. It will also give you the peace of mind that you are not in for a financial shock once all the festivities are over.

Shop online: Where possible consider shopping online. Not only does this help to avoid the crowds in busy shopping centres, but it also allows you the opportunity to calmly compare prices between online supermarkets and shops. Most stores extend their sales and promotions to their online stores. Shopping online allows you to thoroughly look for online promotion codes to save even more money. You will also save on fuel money when you do not have to drive to the stores. Online shops often deliver for free if you spend over a certain amount.

Share the costs of holiday meals: If you are hosting any holiday meals or parties, don’t be shy about telling people what they can bring. Allow others to bring food so everyone can share in the cost of the celebration. It is also a nice opportunity to get everyone involved and feeling the excitement of planning the special meal.

Set up a separate holiday account: Make the arrangements to have part of your pay check directly deposited into a separate savings account solely for saving for the holiday period. Or, if you don't get regular pay checks, set up an automatic transfer to the savings account.

If you are a born spender, take extra precautions to keep yourself from breaking into your “piggy bank” prematurely. Do not have your ATM card linked with your savings account. A trip to the bank will slow down any impulse withdrawals.

Remember the real reason for celebrating this season - whether it is family, love or simply that you have made it through another year in one piece.

Merry Christmas from the Justmoney family to yours!

Do you have any other questions about your finances over the festive period?

Register with Justmoney for free and access our Forum to ask any additional questions about your festive finances. We will ensure that a relevant specialist answers your questions within 24 hours, and you’ll have further access to information that will empower you financially.

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