Johannesburg - It might not be the most festive choice, but spending wisely this holiday season could save you from falling into debt next year.
With Eskom awaiting approval for yet another tariff increase, this time one of 16 percent, high petrol prices and annual increases in municipal rates and school fees all coupled with inflation, South Africans might need to be careful when shopping this festive season.
Because of the year-end hype and excitement, the festive season provides the perfect opportunity to spend money that you do not have. Picture: Mujahid Safodie. Credit: INDEPENDENT MEDIA
Mike Schussler, the director of economists.co.za, said he expects retail sales to increase in December, after a “difficult” September and October because of strike action.
But Schussler said he still did not expect the retail sales in December to increase significantly.
A company that supplies debit and credit card machines agreed, based on its own statistics.
Retailers, with the exception of liquor outlets, have been hit hard by a lack of spending, including a drop in spending on beauty products, and at food and beverage outlets, butcheries and pet products, according to SureSwipe.
Sales at fashion outlets and hair salons have seen no improvement, while spending on jewellery has increased by 7 percent, although this is coming off a four-year low.
There has also been an increase in pending at liquor outlets and on health-care products compared with last year.
“Although some economists have suggested that the economy is on the mend, our figures show that consumers are hurting and if they hurt, retailers bleed,” said Paul Kent, the managing director of SureSwipe.
Average ATM withdrawals across South Africa are up from the same period last year, according to Spark ATM Systems.
It said it had found that people across its 2 000 ATMs in the country had increased their withdrawals from R434.22 between December 1 to 11 last year to R459.04 in the same period this year.
Schussler cautioned that South Africans should change their spending habits.
“In South Africa we like to buy cars and televisions, but we don’t like buying important stuff like stoves and school uniforms,” said Schussler.
He also said the pay increases that employees were getting might not continue for much longer and they should already be planning ahead.
The National Credit Regulator (NCR) said a “festive hangover” could be avoided by simply planning ahead.
The regulator said there were 19.6 million active credit consumers in South Africa who owe R1.36 trillion in loans, including mortgages, vehicle finance, credit cards, store cards, personal loans, short-term loans, pension and insurance-backed loans.
Only 53 percent of the active credit consumers are in good standing with their credit or service providers. The rest have impaired records.
The NCR urged consumers not to fall into the 47 percent because of overspending this December.
How to avoid the festive hangover
Don’t calculate your bonus into your spending budget. “Your bonus, if you get one, should be used to pay off debts and other expenditures,” says Louisa Hetisani, credit information and research manager at the NCR. Rather use your bonus to reduce your debt burden by paying off existing loans, it will pay off in the new year.
Be proactive and double up on your regular payments such as mortgage or rent, lights and water. That way you will be able to afford costs such as school fees and uniforms that will hit you at the start of the new year.
Prioritise your home loans or rent. It might not be as much fun as spending money on gifts for yourself or others, but the security of having a roof over your head is more important.
Limit yourself to an amount to spend for each person on your gift list.
Items such as school stationery, uniforms or other useful items are a better investment than plastic toys that don’t last. Choose presents that last long after Christmas.
Instead of buying expensive presents, set up a savings fund and put away a certain amount for your loved ones each Christmas.
Keep a track of all small purchases, especially over the festive season. “When they are all added together, they make a huge dent in one’s finances,” says Hetisani.
Plan holidays far in advance. “Christmas is a very expensive time and last-minute holiday planning can be costly, never mind scarce,” says Jason Bernic, the financial planning coach at independent financial services group acsis.
Avoid temptation and resist “sale” signs. “Ask yourself whether you really need it,” says Bernic.
Budget for next year’s expenses such as school fees. Also, where possible, pay annual premiums – you’ll often find that you get a significant discount.
Focus on family activities instead of going to the mall, and try to make gifts where possible. - The Star