The Easter holidays are just around the corner and, only a few months into the year, many South Africans are only just recovering financially from the December festive season. With the temptation to spend more than usual being high during holiday periods, the time is now to create a more frugal mindset so as to not land up with unexpected debt or the inability to meet financial commitments.
With these five tips from the TrasUnion credit bureau, that needn’t be the case – one can enjoy the holidays AND save money!
Budget, budget, budget
The obvious first step is to establish a holiday budget – and stick to it. Understanding what funds you have to spend on holiday fun is the right place to start before mapping out how much you can afford for each element.
If you’re going on holiday, consider an “all inclusive” option which often delivers lower travel and transfer costs, along with accommodation, meals and even some activities – meaning that you’ll have a clear handle on exactly what your breakaway is going to cost you.
If you’re staying at home, keep tabs on how much you can spend on entertaining – the cost of dinners with friends and family at restaurants, as well as activities, can add up quickly and make your usual monthly food and entertainment budget disappear before you’ve realised it.
Spend in cash
Swiping a card isn’t as meaningful as passing over physical cash, it mentally defers the payment for a later stage meaning that you don’t have that immediate jolt of parting with your cash. Be safety-conscious when it comes to carrying cash, but try paying for one shopping trip or entertaining session with actual banknotes and see how your perception of how much you “need to” spend will change.
Check your loyalty points
Almost every retailer and bank has a loyalty programme that earns you points or rewards for regularly shopping or spending with them. Take some of your down time over the holidays to investigate the status of your loyalty accounts – you may find you have some extra points to spend to help you with your costs, or a special offer that makes sense to take advantage of.
Trade in memories, not gifts
There’s no reason to get yourself into debt by splurging on any kind of holiday gift or a haul of expensive Easter Eggs which won’t see the end of the day – focus instead on making memories with your family that’ll last longer. Give the gift of an experience or an item that has greater sentimental value – not a greater cost.
Beware “holiday deals”
Is that deal really a deal – and if it is, is it something you really need? Retailers rely on holiday season spirit and the odd tug of the heart strings to generate extra sales at a time when you’re relaxed and enjoying yourself with the family. If it’s a big-ticket item that you’ve been eyeing for a long time, consider whether it actually fits into your budget before taking the plunge.
It can also be tempting to consider bulk deals that look like amazing specials – but consider whether you’ll ever use the entire quantity of product on offer – especially if it has an expiry date.
“Part of assessing how much you can afford to spend at a given moment is understanding your debt-to-income ratio – your monthly debt commitments, versus your income. Credit providers take your affordability into account when assessing you for credit, in the same way. To work out your debt-to-income ratio, add up all your monthly payment commitments – not including discretionary expenses like groceries and entertainment. Divide this by your net monthly salary to get your debt-to-income ratio. The TransUnion scale considers 0 to 20 percent ‘good’ and anything above 41 percent ‘at risk’,” the credit bureau advises.