Four ways to make sure you remain solvent this festive season

MBOMBELA – Taking a break and enjoying in the sun with friends and family over the festive season can be one of the best ways to ending the year.

Unfortunately, many consumers use debt to finance the week or two away, only to be faced with the reality in the New Year.

The choice may seem simple at the time, but it can have long-term consequences, says Ms Nolene Parboo, senior manager of savings and investments at Standard Bank.

She says that having a savings plan is important.

“Deciding on the course you want to follow is simple if you look at the reasons why you should save, while at the same time looking at the reasons why you should not spend all your savings on the short-lived benefits of an unplanned holiday or shopping spree.”

Being honest enough with yourself to admit that there is no such thing as a normal month:

Having to live through a cash-strapped January when even making normal payments puts a strain on the household, is just one of the reasons not to overspend in December.

• See also: Ten food saving tips to munch more for less

“People tend to forget about the once-off annual payments that normally become due in January.”

She adds that a lack of rainy day savings can leave people facing a financial storm, and that they often find that the impulse purchase they made in December with savings is cheaper in January.

“Life happens. So do unexpected medical expenses that fall outside medical aid limits, car repairs, house repairs and electrical and plumbing emergencies. Not having saved for a rainy day can result in these unexpected expenses creating a financial storm in the New Year.”

“All of this may sound depressing. However, you can enjoy a good holiday and keep your savings intact if you do a little budgeting and stick to it,” she says.

To ensure a happy start to 2016:

1. Do a reconciliation of what you spent (and overspent) during the festive season:

Once you know what your expenses were, divide them by the number of months available before the next festive season and put aside money to cover these expenses every month. Alternatively, spend a set amount every month and begin buying presents early.

You will be able to stretch your budget by taking advantage of the January, April, end of summer, winter and spring sales.

2. Make small adjustments to your discretionary spending:

Think about expenses on a monthly and yearly, instead of daily, basis. Sacrificing two cappuccinos a day at work means a saving of about R30 per day or R6,000 in a 50-week working year. Add in a packed lunch instead of buying food at a canteen and the savings become more significant.

3. Decide how you are going to pay for purchases:

Using a credit card for purchases rather than a debit card, and paying the amount owing in full each month, means you get 55 days of free credit and don’t have to pay a transaction fee as you would if you drew cash or used a debit card.

4. Check out the benefits offered by loyalty schemes:

You can stretch your budget and increase your savings by optimising the use of loyalty programmes. The points you accumulate can be used to reduce travel and holiday costs, or to buy presents for the family.

“Budgeting need not be a painful process. Just making a note of where you spend money every month will show you exactly where you are spending unnecessarily.

“Cut these items out and you will have year in which you still go on holiday, but keep your savings, and finances, intact,” Parboo concludes.