The holiday season is fast approaching! Immediately, the things that come to my mind are Christmas time, gifts, holidays, braaing, beer, cocktails, wine, friends, family, good times, to mention a few.
These things are perfect opportunities to spend money. But spending money is one thing, over-spending is another. What I mean here, is spending money you do not have, namely using credit for things that you do not necessarily need, or even want for that matter, but which are considered “must haves” by your friends, family and society.
The purpose of this article is to get you to start thinking about your money. That’s what I said, “YOUR” money. The money that you have worked so hard for, the reward you get each month for the privilege of being employed, the money that will go towards your children’s education, clothes on their backs, food in their tummies. Not to mention your home loan and vehicle instalments.
Unnecessary spending will take away from money that you will have for your children, for you home loan and yes even for that well earned (but affordable!) holiday. Now is the time to prepare and arm yourself against silly season spending!
Let’s chat briefly about credit. What is credit? Easy enough, credit is money you borrow which will allow you immediate access to those things you want, but do not have the cash for right now. So, not your money. Credit is not the problem. Acquired in the appropriate circumstances and managed correctly, credit is not bad, in fact it may be considered healthy.
Credit makes debt right?
Yes, but what is debt? Money you lend and then pay back, including interest. Yes, you have to pay it back! This is not charity people! An example would be your home loan instalments. And expenses? Aha! Caught you there didn’t I! Expenses are things that you pay for using your own money. Again “YOUR” money. So, things like your medical aid, school fees, groceries and gifts.
Seems simple enough doesn’t it! Why then do you pay for your groceries, clothing and gifts using your credit card and then only pay the minimum monthly instalment? Here, you are turning expenses into debt. Here, you will ultimately pay for one week’s groceries over 12 months or more!
With the holiday season almost upon us, start thinking now about “YOUR” money. How best are you going to spend it? Avoid turning expenses such as gifts, nights out for dinner and drinks, holidays into debt.
How?
Here are some debt trap avoidance tips:
1. Agree with friends and family that you may all only spend a maximum on gifts for one another
2. Or how about everyone’s name goes into a hat and you only need to buy a gift for that person- according to your agreed maximum of course!
3. Only take a certain amount of cash with you when you go out. Once that amount is done, so are you.
4. Better yet, invite friends over to your house
5. Plan ahead for gifts- you will always pay more for last minute shopping
6. Go on holiday only if you have saved money for this purpose. Do not holiday on credit
7. Make a realistic daily holiday budget. Make sure you stick to this
8. Do not be misled by seductive Xmas marketing, offering you “free gifts” or “gift vouchers” with the purchase of something you do not want or need
9. Be strong and use your willpower- now is the perfect time to fall into the trap of opening a store account- do not purchase gifts on credit
10. ‘Tis the season to be jolly and carefree – but not when it comes to spending. Is it really necessary to run a tab at the bar? Do you honestly need another pair of shoes? Can you actually afford that luxury gift for your partner?
11. Store Xmas sales? Be careful here- chances are you will not find the item you have been searching for, but will find something else that you never thought of and do not need. Purchasing unnecessary items on sale is a debt and spending trap!
So, debt and expenses are not the problem. It is our management of debt and expenses which is the issue. Most people cannot purchase their home or vehicle for cash. Some debt is necessary to live and enhance our lives. But, it is also essential to manage our daily, weekly and monthly spending and expenses.
In the path towards Financial Wellness and Freedom, think of this concept- “Conscious Spending”. Always be aware of the actual money you are spending and the effect that this spending will have on you and your family. This is particularly relevant over the holiday season- everywhere we go retailers are tempting us to part with our hard earned cash.
Consciously spending your money will arm you against the New Year “debt hangover”. You will begin the New Year with money for schooling, uniforms and other obligations.
Here is to a Happy, Healthy and Financially Free New Year!
Robyn is an attorney by profession, an ex-private banker and ex-credit grantor. She was previously a registered and practising Debt Counsellor. Utilising the skills and expertise acquired over the course of her career, through her business, ‘DebtComm’, various services to assist individuals to manage their debt are offered. Business areas include: Informal Debt Counselling, Employee Financial Wellness/ Debt Management, Financial Brokerage Intermediary, Corporate Legal- Financial Workshops. Email her at:
robynh@debtcomm.co.za
What tips do you have for spending wisely during the festive season?