Keep Your Finances On Lockdown This Festive Season

The festive season time is upon us – and while the bells may be jingling, our wallets certainly aren’t. Yet, it’s not all doom and gloom, as there are a few clear indicators that a gradual economic recovery is on the way.

According to Momentum financial planner Janine Horn, South African households are not as battered as you might think – the 2020 Momentum/Unisa Household Wealth Index has revealed an improvement in the second quarter of 2020, with household wealth showing a strong recovery thanks to a decrease in household debt of over R13.5bn.

“While this can mostly be attributed to the sharp decline that was experienced in the first quarter of the year when lockdown was first announced, it does indicate a very slow return to normal – but it will take a while until we see a significant improvement.

“We need to expect that things will be uncertain for some time – and this means keeping our money where it matters most – firmly in our grasp.”

After a challenging year, it may be tempting to splurge over the festive season, but Horn advises that you keep a handle on your finances – offering a few tips to help you retain control of your money.

Budget first, always.

“It might sound obvious – but you would be surprised at how many people go about their lives without a proper budget,” says Horn. “A budget should form the financial foundation of every household; without one, you are setting yourself up for trouble – especially when the future is uncertain, as it currently is.”

They don’t call it Januworry for nothing. People tend to overspend when it comes to the festive season, and getting paid salaries earlier in the month only exacerbates this issue.

Horn’s advice is to follow these four simple step when planning your festive season budget: 1) Determine what you can afford to spend; 2) Assign a value to each gift or activity; 3) Shop around to find the best deals possible; and 4) Stick to your budget!

Shop online and find the best price

With e-commerce booming as South Africans side-step the malls in an effort to keep out of the clutches of Covid-19, Horn highlights that the great thing about online shopping is that it is easy to shop around for the best price or deal.

“Giving this sharp surge in demand, many online shops are now offering fantastic deals and specials on a wide range of items, as an incentive to customers. Shop around to find what you are looking for, at a price you can afford” advises Horn.

She recommends scanning websites such as pricecheck.co.za, which compare the prices of all the major online stores – doing the hard work for you!

Making gifting a group activity

Like the stokvel of giving, it is a good idea to pool money with a few friends, colleagues of family members to buy a gift for someone. The advantage of this is that the recipient gets a nicer gift, while you benefit from sharing the cost with others. Get all your siblings together to buy one big gift for your parents. Ask colleagues to go in on a nice gift card for the boss. Email the parents in your child’s class and ask them to donate a few items to make up a generous gift basket for the teacher. These are all good alternatives that will help you save money, without having to gift a skimpy present.

The right advice is invaluable

According to the 2020 Momentum/Unisa Household Wealth Index, the outlook for the third quarter of 2020 is cautiously optimistic. The index predicts that the real value of household wealth will gradually stabiles, as the economy embarks on a slow journey to recovery.

However, we shouldn’t get too comfortable, warns Horn. “Yes, our collective financial situations might improve as we settle into Level One, but don’t let this lull you into a false sense of complacency. These are unique times for all of us, which means that the future is still very much uncertain.

Horn says the festive season will reveal just how our behaviour helps or hinders our journey to success. “While this index bodes well for South African households as a whole, many households will need to take control of their financial journey, which might entail getting expert advice, in the form of a financial adviser.

“Because growing can only happen from knowing,” she concludes.