Says Benay Sager, head of DebtBusters: “The collective impact of rising inflation and interest rates on consumer finances is very evident in the Q2 2023 data. Average loan size has increased by 78% since 2016 and 95% of consumers who applied for debt counselling during the second quarter of 2023 had a personal loan.
Unsecured debt was on average 26% higher than in 2016 and 39% up for those taking home R20 000 or more a month. It is abundantly clear that consumers are using unsecured credit to supplement their income.”
This is especially important considering that so many South African’s are currently drowning in debt, according to the findings from DebtBusters’ Q2 2023 Debt Index. With this in mind, the last thing anybody wants is to start the new year sinking further into debt, having to count every penny, and watching their savings evaporate.
So, let’s talk about how you can make your December absolutely fantastic, while still ensuring that you have less financial worries at the start of the new year.
Also read A parent’s guide to budgeting
Create a budget
The first rule of a worry-free January is setting up a budget – just like jingling bells and gingerbread cookies, a budget is a must for the holiday season. With end-of-year vacations, gift-giving, and entertainment, the festive season often tempts us to overspend, but a well-structured budget will help keep your finances in check. By meticulously planning income and expenses, we gain a clear picture of what’s affordable, preventing impulsive purchases and reckless splurges.
This proactive approach ensures that we allocate funds for essential bills, school fees, and savings first, leaving no room for anxiety when January rolls in. It’s not about curbing the holiday spirit, but rather about enjoying it responsibly. A December/January budget empowers us to strike a balance between merriment and financial security, making the transition into the new year smooth and worry-free.
Standard Bank offers a step-by-step guide on how to draw up a monthly budget, and even provides a template that you can use. It advises that you follow the 50/20/30 rule: “This approach is simple, can have a big impact on your budget, and is a useful place to start if you are finding it challenging to allocate a total spend to the categories in your budget. In this rule, 50% of your income goes to necessities, 20% to long-term savings, and 30% to lifestyle choices.”
Realistic gift giving
It’s fun to be Santa’s little helper, but your wallet will appreciate a little restraint. Be realistic about your gift-giving budget. You don’t need to splurge on everyone; thoughtful gifts go a long way. A hand-painted mug, homemade cookies, or a heartfelt card can be more cherished than an expensive gadget. Set a limit for each gift and stick to it.
It’s not about the price tag; it’s about the love and thought behind the gift. As Warren Ingram, Executive Director for Galileo Capital, told CapeTalk:
“Remember that the festive season is about spending time with your loved ones, not spending all your money, and creating financial stress.”
A good idea is to shop ahead for Christmas presents and save them for the big day – this way you can take advantage of big sales like Black Friday and Cyber Monday deals, and not have to panic about last-minute purchases and crowded shopping centres.
Alternatively, you could consider buying small presents for children, and rather depositing money into their savings account instead. If you deposit every year, by the time they’re older, they’ll have a tidy sum to kickstart the purchase of their first car or first adventure overseas.
Secret Santa fun
Shake things up at large gatherings or in the office by embracing the Secret Santa tradition. Instead of purchasing individual gifts for everyone, draw names and become a Secret Santa for one person.
This way, you can focus on selecting a single meaningful gift while upholding the spirit of giving. To make it accessible for all participants, establish a maximum budget. You can also introduce additional creative parameters, such as crafting homemade presents or offering gifts of time and shared experiences.
Memorable entertainment
Decking the halls doesn’t have to cost a fortune. DIY decorations can add a personal touch to your holiday decor without breaking the bank. Get creative with homemade wreaths, paper snowflakes, and recycled ornaments.
Plus, they make for great family activities, adding more joy to the season. Prudent Penny Pincher offers some great ideas on how to decorate your home for Christmas on a budget.
Feasting is a December tradition, but hosting a full-course meal for everyone can make your wallet shiver more than an elf in the North Pole. If you are entertaining, it is a far better bet to consider a potluck dinner where everyone brings a dish and some drinks to share. It’s not just cost-effective; it’s also a great way to sample diverse culinary delights. SignUpGenius offers some great Christmas Potluck entertaining ideas.
So, there you have it, your recipe for a splendid December without the looming Januworry blues. With a budget, a little creativity, and a dash of smart shopping, you can enjoy the festivities without a financial hangover in January. Cheers to a joyful, budget-savvy holiday season!
Read Blended family budgets
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