Financial circumstances have been a lot tougher this year for many South Africans due to increased individual taxes and the rising prices of basic goods.

However, this is unlikely to drastically curb consumer spending during the festive season.

Most people struggle to contain their spending over the festive period and unfortunately, some also make vital financial mistakes which could have a long-term negative impact on their financial well-being,” said Ester Ochse, Channel Head at FNB Financial Advisory.

“The most common scenarios are that people who have some budget to spend tend to over-stretch it and those who do not have any budget often sacrifice in areas which could potentially ruin their financial position.”

Ochse says even though most people are able to recover from financial mistakes made during ‘silly season’, it often takes a while to get to the same position.

She points out the following financial blunders as the main ones to avoid:

Skipping debit order payments

Most people exploit the convenience of getting their salaries early in December by withdrawing every cent, leading to unpaid debit orders.

Do not make the mistake of withdrawing every cent to finance your festive season spending at the risk of your debit orders not being honoured. Not only will you have to make-double payment(s) during the following month, this could also damage your credit profile.

Taking up new debt to fund entertainment

‘Silly season’ spending should never be funded through debt; it is just not worth it. Any debt you take should go towards financing a worthy cause such as renovating your home or supplementing non-negotiable costs such as school fees.

Using money reserved for school fees

Do not ‘gamble’ with your child’s prospects by using funds which are reserved to pave a better future for them. Resist the temptation to sacrifice school fees in order to generate extra money for your leisure during the holiday period.

Cashing long-term investments

It is not advisable to cash long-term investments just to fund your festive season entertainment. You’ll have to start all over again and take months if not years to build a considerable investment portfolio.

If you believe that now is rather late to start budgeting for your festive season spending, review your plans to align with your available budget. Better financial planning ahead of and discipline during the festive season will certainly put you in a better position ahead of the New Year,” concludes Ochse.

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