Plan ahead and avoid DEBT-CEMBER

A financial education expert recommends that you balance what your family wants with what your budget allows this festive season

SOUTH Africans who live far from where they grew up love to go home during the festive season to catch up and reconnect with their families. The problem is that this joyous time of togetherness can often be hard on your pocket.

JOHN MANYIKE, head of financial education at Old Mutual, says: “Caring for our families is one of the main reasons why we work as hard as we do, and providing financial assistance is the right thing to do. But it’s very important not to overdo it and risk your own financial security. “It’s vital to have a solid financial plan to get you through this period without getting into debt or being forced to do a ‘vosho’ to impress an ATM in the hopes that it will vomit money despite a R6 bank balance after the festive spending spree.”

Manyike says that your plan should be realistic and based on what you can afford. So when deciding how much of your available funds to allocate to family obligations, make sure you balance your family’s expectations with what you can afford.

The question for many people is whether they can fulfil their family responsibilities, while also meeting their regular monthly obligations such as the bond or rent, transport costs, savings and insurance premiums, groceries, and still have some money extra for January, which can be a very expensive month. “People need to remember that there is life after December,” Manyike says.

According to the 2018 Old Mutual Savings and Investment Monitor, 36% of working metropolitan South Africans have dependants besides their children. “Whether it is supporting parents by contributing towards their grocery bill for the December holidays, or buying clothes for unemployed siblings for Christmas, the trick is to stay within your budget to avoid visiting ‘uMashonisa’ in the first week of January to cover the essentials like fuel, bus fares, groceries, back-to-school stationery and uniforms.”

He offers these budgeting tips to help get you through the festive season:

BALANCE YOUR BUDGET

Don’t go into the festive season without a budget. Before spending a cent on non-essential luxuries, it is essential to fulfil all your regular monthly expenses. No exceptions should be made.

Next, allocate some funds towards the family expenses, entertainment and gifts. If you haven’t saved up for this already, you can use some of your year-end bonus (if you get one) or stokvel savings.

Be realistic about what you can contribute and don’t spend beyond your means. Using store accounts and credit cards to finance festive entertainment will leave you bloated with debt and can jeopardise any financial aspirations you may have for the New Year.

REDUCE YOUR DEBTS

Allocate a portion of your bonus towards paying off your debts or back-to-school expenses, and even shop for these essentials during December.

KEEP SIGHT OF LONG-TERM GOALS

Don’t forget to allocate a certain portion towards your savings. “Saving towards your long-term goal is important, don’t lose sight of that. Make sure you stick to your commitment towards reaching this goal, whatever it may be.”

UNWIND AND HAVE FUN!

Although it’s important to be responsible during the festive season, it’s also important to unwind and recharge your batteries.

Set aside some funds so you can spoil yourself a bit, or put it towards your festive season social budget. Remember that if you get paid early in December, you need to be disciplined to ensure you get you through to your next pay cheque at the end of January.

“Don’t fall into the temptation of faking success to impress family members and old neighbours you may not even like with money you don’t have. Instead, communicate openly with your family members and make it clear that your budget is limited. Specify how much you have available to help. This will ensure you stay out of debt and never have to avoid calls from friends and relatives demanding their January ‘parcel’*,” Manyike says.

*Parcel: township slang for money owed.

People need to remember that there is life after December