Hoo-ho-ho. Let's reduce spending

With the holiday season approaching, it is critical to address the associated tendency for consumer overspending.

The recent Black Friday shopping spree started the spending trend. To participate in this, many people, unfortunately, take out loans and spend excessively on non-essential items, putting wants ahead of true needs.

The National Financial Ombud strongly advises consumers to exercise caution before accumulating debt that could lead to a "financial hangover."

While seasonal discounts are appealing, the long-term repercussions of overspending on credit, including high-interest debt and diminished savings, can significantly impede financial objectives and cause post-holiday difficulties.

In South Africa, January financial struggles are common. This is often exacerbated by December's early payday, when many South Africans receive their December salary earlier, subsequently spending it during the festive season.

This creates a long gap between the last payday and the next one at the end of January. Additional factors contributing to January's financial strain include increased holiday spending and the simultaneous onset of new year expenses.

These encompass annual increases in insurance and medical aid premiums, back-to-school costs, and the need to restock essentials. Many households stretch their finances thin to cover these obligations, frequently leading to increased short-term borrowing and financial stress.

To mitigate "Janu-worry," consumers should proactively plan December's earnings to cover both December and January’s expenses, prioritizing essential bills and commitments first. A common recommendation is that if you receive a bonus, set aside a portion of it for debt reduction or savings before you spend it on anything else.

Parents and caregivers should keep in mind that next month marks back-to-school, which has become a stressful time for parents across South Africa due to the high cost of living.

According to financial advisors, slightly more than a quarter of parents have indicated that they must dip into their savings to make ends meet around this time of year. In order to pay for back-to-school expenses, 88% of parents will have to reduce their monthly spending on necessities like food and transportation, according to a 2023 survey.

We know December is a time for joy and celebration, but let's try to keep our wallets closed and think before swiping our credit cards: is this a want or a need?

Everyone have a joyous holiday season.