4 budgeting tips to avoid ‘Debtcember’

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South Africans who live far from where they grew up love to “go home” during the festive season to catch up and reconnect with their families. The problem is that this joyous time of togetherness can often be hard on the pocket.

“Caring for our families is one of the main reasons why we work as hard as we do, and providing financial assistance while you are home is the right thing to do. But, at the same time, it’s important not to overdo it and risk your own financial security,” says John Manyike, Head of Financial Education at Old Mutual.

It’s vital to have a solid financial plan in place for the December holidays so you can avoid going into debt. Your plans for the festive season should be realistic and based on what you can afford. When deciding how much of your available funds to allocate to family obligations, make sure you balance your family’s expectations with what you can afford.

The question for many people is whether they can fulfil their family responsibilities, while also meeting their regular monthly obligations like the bond or rent, transport costs, savings and insurance premiums and groceries. Keep in mind you will still need some extra money for January, which can be a very expensive month, too.

ALSO SEE: Tips to help stretch your rand this festive season

According to the 2018 Old Mutual Savings and Investment Monitor, 36% of working metropolitan South Africans have other dependents, besides their children. “Whether it is supporting parents by contributing towards their grocery bill for the December holidays, or buying clothes for unemployed siblings for Christmas, the trick is to stay within your budget to avoid visiting uMashonisa in the first week of January to cover the essentials like fuel, bus fares, groceries, back-to-school stationery and uniforms.

John offers these budgeting tips to help get you through the festive season:

  • Don’t go into the festive season without a budget.
  • Before spending a cent on non-essential luxuries, it’s essential to fulfil all your regular monthly expenses. No exceptions should be made.
  • Next, dedicate some funds to family expenses, entertainment and gifts. If you haven’t saved up for this already, you can use some of your year-end bonus (if you get one) or stokvel
  • Be realistic about what you can contribute and don’t spend beyond your means. Using store accounts and credit cards to finance festive entertainment will leave you bloated with debt and can jeopardise any financial aspirations you may have for the New Year.

Reduce your debts

Allocate a portion of your bonus towards paying off your debts or back-to-school expenses, and even shop for these essentials during December.

Keep sight of long-term goals

Don’t forget to allocate a certain portion towards your savings. “Saving towards your long-term goal is important, so don’t lose sight of that. Make sure you stick to your commitment to reach this goal − whatever it may be.”

Don’t forget to unwind and have fun!

Although it’s important to be responsible during the festive season, it’s also important to unwind and recharge your batteries − especially if it’s been a demanding year.

Set aside some funds so you can spoil yourself a bit, or put it towards your festive season social budget. Remember, though, that if you get paid early in December, you need to be disciplined to ensure you get through to your next pay cheque at the end of January.

“Don’t fall into the temptation of faking success to impress family members and old neighbours you may not even like, with money you don’t have. Instead, communicate openly with your family members and make it clear that your budget is limited. Specify how much you have available to help. This will ensure that you stay out of debt and never have to avoid calls from friends and relatives demanding their “January parcel,” concludes Manyike.

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