‘Tis the season not to overspend
South Africans are not deterred by steeper-than-usual prices when it comes to festive season splurging.
Despite warnings from financial planning gurus to exercise caution‚ an analysis of the Consumer Price Index over the last festive period by credit bureau Compuscan found that “despite steeper than usual increases in prices‚ sales in certain industries increase as well”.
“Road trips and camping are iconic South African holiday activities. Fuel sales‚ bus sales‚ and camping all enjoy increased revenue during the festive season.
“Hand in hand with road trips and camping are food and drink. Braais‚ parties‚ picnics‚ days at the beach‚ and overall festivities at home and work all drive profits during this time‚” Compuscan stated in its analysis.
The hardware‚ wood‚ textile and metal industries took a knock during this period because of their annual breaks.
Contributing factors to South Africans splashing out include annual bonuses‚ sales that drive shop traffic and spending on non-sale items‚ shifts in spending from work-related goods to holiday-related goods‚ back-to-school preparations in January and social pressures.
“The implication for the credit industry is a possible trend for consumers to take out credit that supports the above spending habits‚ which includes opening retail accounts‚ cell phone accounts‚ etc.
“It’s the silly season‚ and consumers are driven by retail advertising and the social pressures the festive season. And while spending is good for the economy; the possible festive season-related irresponsible borrowing can affect economic elements such as inflation and cost of living‚” the analysis stated.
PPS Financial Planning’s Nico Coetzee said it came as no surprise that many South Africans tend to overspend during the festive season‚ failing to remember that there is still a full month of expenses in January.
“During this time‚ people are more relaxed and are trying to have fun‚ so they naturally neglect to plan properly and end up spending money carelessly.
Coetzee said sticking to a realistic budget would prevent overspending and added debt.
“The stress of sticking to a budget is actually less than the stress of overspending. By planning you will find that sticking to a budget isn’t a chore‚ but simply a natural outflow of your planning.”
Here are some key tips to help you budget better during the festive season:
- Make a list of the key expenses you foresee during this period.
- Find a balance between your goals for the holidays and your finances.
- Don’t deviate from your regular financial plan.
- Budget for emergencies and unexpected adventures.
- Open a separate savings account and keep credit and cheque cards “hidden”.
- Do not compare your holiday plans with another family’s. Plan your holiday according to what you can afford and don’t compete with others.