How To Avoid Being In Debt

During The Festive Season

Article by: Unarine Masala, Revenue Manager | Professional Accountant (SA) | MBA |Debt Collector registered with the Council of Debt Collectors, South Africa; ADARA

The festive season is a time of joy and celebration, but it can also become a financial strain if not managed wisely. Here are practical tips to help you avoid falling into debt while still enjoying the festivities:

  1. Planning

    • Focus on priorities and be intentional about your spending.
    • Create a monthly plan or budget for your regular expenses, and prepare a specific festive budget to avoid impulsive spending, especially during Black Friday or holiday sales hype.

  1. Budgeting

    • Set a realistic budget that aligns with your income and festive season needs.

  1. Saving

    • Decide how much you will save from your income or bonus during the festive season to prepare for future expenses.

  1. Spending Smartly

    • Purchase essential items in bulk before the festive rush begins.
    • Set a Spending Limit: Stick to your allocated budget to avoid overspending.
    • Avoid unnecessary purchases, especially items you do not truly need.
    • Allocate a specific budget for alcohol, as this can be a major expense. For those celebrating in rural areas where customs like ukuvuselwa/Khirisimusi bogisi (buying alcohol for neighbors) are common, consider purchasing alcohol in bulk from formal distributors in advance to save costs.
    • Establish a daily alcohol consumption quota for you and your guests to prevent wasteful spending.

  1. Avoid Financial Pitfalls

    • Avoid spending while under the influence of alcohol. For example, accidentally purchasing R1,000 of airtime instead of R100 on your banking app can be an expensive mistake.
    • Steer clear of attending unplanned events. If traveling is not an option, embrace the opportunity to make your home festive and inviting.
    • Limit the cash you carry to prevent theft or unnecessary spending.
    • Minimize the amount of money available on your banking app to curb impulsive transactions.
    • When going to clubs or entertainment venues, withdraw only the amount you plan to spend, and temporarily block your card or disable the tap-and-pay feature for safety.

  1. Protect Yourself Against Scams and Fraud

    • Never share your online banking access details or ATM PINs.
    • Be cautious of unfamiliar messages or links that could be phishing attempts by scammers.

  1. Avoid Unhealthy Financial Habits

    • Stay away from gambling, which can drain your resources.
    • Refrain from taking loans or overusing credit cards during the festive season.
    • Avoid excessive social obligations like buying Christmas gifts for everyone, especially if it stretches your budget.
    • Resist lending money to friends or family during this time.

  1. Consequences of Debt

    • Debt can cause social isolation, especially when others appear to be enjoying the festive season.
    • It impacts mental health, potentially leading to depression.
    • Accumulating debt may force you to rely on loan sharks, further straining your income and emotions.
    • Long-term debt can lead to blacklisting, damaging your credit score and financial future.

According to the Credit Bureau Monitor, one-third of South Africans with credit struggle to repay their debts, with 10 million people falling behind by three months or more, or facing legal action and adverse credit listings. This issue even affects financial professionals.

Remember: It’s Okay Not to Buy!

Being financially responsible is better than succumbing to pressure. Stay spending-savvy, make wise choices, and enjoy a stress-free festive season.