Be money savvy this festive season

Mellony Ramalho, African Bank’s Group Executive: Sales, Branch Network, says often we don’t plan properly for the festive season and end up overspending and having to take on unnecessary debt which can be crippling as the new year expenses start rolling in. “If you are planning on going to see family and friends during December and want to take gifts, groceries and money, then now is the time to start saving or possibly buying and putting items away,” she says.

She offers the following 5 tips to be money savvy this festive season:

· Work out a budget and stick to it. Work out what you can afford to spend on gifts, travel and celebrations and draw up a budget that clearly outlines these amounts. Don’t be tempted to spend more than you have budgeted for. Starting the new year in debt isn’t fun.

· Remember that your regular expenses such as rent, bond repayments, policies etc remain during December and January. Some premiums are even doubled in December e.g. gym membership fees. These need to be factored in when putting your budget together. While it is great to enjoy some extra spending over the festive season, the essentials need to be covered first.

· Remember that when buying on credit you pay an increased price for the money that you borrowed when you finally pay that amount back. Credit isn’t free. Initiating credit with any registered financial entity entails interest, service and initiation fees added onto the required amount. Try and avoid spending money you don’t have because the price you pay back is more than if you’d paid cash.

· Don’t blow your bonus. Consider investing it and watching it grow over the long term. If you are a first-time investor draw on the knowledge and expertise of those who have been investing for some time before making a decision. Do your research, ask questions and compare various products. The key is finding the product that meets your objectives – how much you want to invest, what kind of returns you want to see and the time period of your investment.

· There’s nothing wrong with being moderate. It’s been a tough few years for consumers and prices aren’t going to be dropping anytime soon. Remember that there is a whole year ahead of you after the festive season is over. Ask yourself what makes money sense before getting caught up in the festive spending frenzy. Be moderate in your purchases.

“If you are finding it difficult managing your debt, now might also be a good time to look into debt consolidation,” Ramalho suggests.

Consolidation loans offer a simpler way of managing your money when your goal is to regain financial stability or simply to manage multiple payments more effectively and efficiently. “They are especially helpful if you want to simplify your credit by settling other debt and turning several loan payments into one cost-effective payment,” she says.

One of the biggest benefits is that instead of having several creditors all with different credit agreements – all with their own terms, monthly fees and interest rates – debt consolidation bundles all these payments into one affordable monthly repayment, often lowering the total cost of credit to the consumer.

“It is a sensible way for consumers to simplify their management of multiple lenders and multiple loans. Consolidation can also free up cash flow and provide one with access to additional capital. This capital could be a good resource for emergency situations should they arise.”

“Whatever your plan is for the festive season expenses, the key is sticking to the plan. Don’t be tempted to dip into your savings, for example, that may be intended for something else like school fees,” she adds.

With that in mind Ramalho also offers the following tips on how to make sensible gift-buying choices:

· Write a list of everyone you want to buy presents for, and then write ideas of what to get them next to their names.

· Whenever possible, buy joint gifts – a couple can get something for their house, a family can get a board game and siblings can get a toy that requires more than one person to play with it.

· Do research. Shop around and compare prices; don’t simply purchase the first thing that you see.

· Make your own cards – the personal touch is both special and affordable.

· Buy wrapping paper in bulk – it will work out cheaper than buying singular rolls. Although it is always a bit more lavish to put gifts in special boxes with bows and crepe paper, it is more affordable to buy rolls of wrapping paper.

· Buy small and significant, rather than large and lavish. It might be an old, somewhat clichéd saying, but it really is the thought that counts. You don’t need to show someone love by spending a fortune on the latest gadget. Rather take their

personality into consideration and buy something meaningful.

“Let’s start the new year debt- and worry-free,” she concludes.