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Wise festive spending tips

The festive season is upon us, with adverts, the internet and shop front sales encouraging shoppers to embark on the usual festive season practice of “shopping ’til you drop”.

But you also need to brace yourself for the subsequent financial shock, when the credit card statements land in your inbox and school fees are due, warned Mohammed Nassuirio, an executive financial planner at Nedbank Private Wealth. Overindulging in food and drink is often matched by over-spending, turning the first quarter of the new year into a budgeting damage repair exercise.

Nassurio shared these tips to turn festive season spending into a financial success:

Give your mind a holiday by setting a budget

Plan your festive season finances early and wisely. Consider your household income and all expenses for December and January, then draw up a budget for festive spending – not just presents, but the additional spending on food, drink and socialising – so you can manage the overall effect Christmas spending has on your finances over a number of months. Don’t be pressed into spending more than you can really afford.

Use savings and credit wisely

Ensure you know how your extra spend is going to be financed. If you’re going to use credit make sure you use it on creditworthy items. It’s not a good idea to buy perishables on credit; once you’re done with them you will be left with nothing but the debt, and you end up paying more than you intended per item owing to interest repayments. Zero-percent interest in-store credit may also appear to be attractive finance options for gifts and clothing, but don’t do it unless you’ve considered the potential pitfalls and whether you will be able to afford the payments should your financial circumstances change.

Plan your shopping and stick to your list

Shopping on impulse is dangerous. It’s easy to get caught up in the festive hysteria, following the masses and buying, because you think you may not get a better price. So rather shop like you’re Santa by being prepared and limiting the temptation to over spend by:

. making a list of what you need to buy and where to purchase it;

. setting a time limit on your shopping;

. shopping at odd hours; and

. pre-paying if you buy online, and check if there’s an option to pick up in-store rather than paying for delivery.

Be creative

Think outside of the gift box by researching gifts options and finding cheaper and more fun alternatives. Make a list of who you’re buying for, what you want to buy and how much money you’re prepared to spend on each person. Your list could also distinguish between your close and distance relatives. South Africans love gift cards and vouchers, but too many of us let the funds expire before using it. Check the expiry date on any gift cards you still have credit on, and consider putting this money towards your festive season costs. These also make good presents for people who are hard to buy for.

Plan for the next festive season

Once this Christmas is done and dusted, you should start planning ahead for next year by:

. starting to save now;

. shop the sales; and

. purchasing on lay-by.

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