It’s easy to get carried away over the festive season. Because it’s bonus time and a traditionally viewed ‘time for giving,’ unnecessary overspending can have unfortunate consequences in both the short and long term. But there are ways to treat yourself and still think of your financial future.
“Firstly, sit down and begin budgeting,” advises Sugendhree Reddy, head of Personal Markets at Standard Bank. “You need to get into the habit of accounting for every cent.”
The first step would be working out how much post-Christmas debt you have accumulated, and decide how to reduce it – and over what time frame.
“One of the reasons most people can’t avoid the end-of-year credit crunch is that they don’t have a plan,” says Ms Reddy.
It isn’t easy: it requires discipline – but a year from now, you’ll be reaping the reward of being debt-free.
The elements of a successful budget plan
– Honesty: write down an accurate and honest list of your expenses and income. Use your recent bank statements, invoices and receipts as a guide.
– Use two columns on the same page. You’ll then be able to get a realistic picture of exactly what expenses you’ve incurred, no matter how small. Remember: it all adds up.
– Compare the totals. If your expenditure exceeds income you need to change your spending habits. Separate your expenses into essential and non-essential categories. Essentials should only include items like rent or bond repayments, school fees, groceries and transport costs. Non-essential things are what are nice, but you can do without.
– Open separate bank acocunts for each category. Don’t be tempted to dip into the essentials account.
– South Africans aren’t saving enough. Budget to save a minimum amount every month, and put it into a savings or investment account. If invested at 12% per annum a mere R200 saved per month will translate into R32 994.55 over five years.
– If you have credit card debt, pay off the specified amount in full at the end of every month to avoid paying interest
– The festive season comes around every year, so budget for it. List your extra expenses for this period, including January
If you’re going to be successful at implementing and sticking to your plan, its also important to understand the charges associated with different banking activities. For example, try to do your transactions online: it’s cheaper than going into a branch.
The rule of thumb of someone who handles money wisely is: don’t spend money you do not have.
If you find yourself in the debt trap, you’re going to need expert financial help. Visit your Standard Bank branch and be totally honest about your financial situation. Where possible, the bank will help you find a solution.
Source: Standard Bank