How to avoid the festive spend hangover

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“The festive season is a very jolly season and a lot of consumers don’t want to compromise on their spending. What is important though is to have that foresight to know that January comes with a lot of expenses,” Zanele Mbere, head of deposits and payments at Standard Bank told CNBC Africa on Wednesday.

She further explained that consumers should set a monthly budget for their festive season spending, just as they should for any other month of the year.

“On a monthly basis, we should be budgeting as we know exactly the income that we’ll be getting and it’s important to know what exactly you’re going to be spending your money on,” said Mbere.

The problem however comes when many employees receive a thirteenth cheque at the end of year and tend to blow most of it on festive shopping.

Neo Leote, public relations manager at the Credit Ombud, therefore believes that consumers should rather look at a long term plan to ensure that they are spending within their means.

“People tend to purchase big ticket items like cars over December because of their bonus. [They use this] as a deposit but they are not thinking long term. Such as, will I be able to sustain these payments for the next 5 years?” Leote explained.

“People don’t really plan for those bonuses. It’s important to make sure that you do have a plan in place and that you can stick to it.”

An interesting factor however, Leote added, is that the worst December season debt is caused by high net worth individuals as they have more access to credit than lower or middle income groups.

“High end spenders have more access to credit and that is where we find a lot of the time people tend to spend a lot more than what they earn to sustain a certain lifestyle or image,” she said.

Mbere therefore proposes that all consumers start formulating a financial plan for the short, medium and long term. Even though financial advice can be sought from experts, the real change and discipline begins with the consumer.

“Your financial plan should be a timetable of your life and that’s important. You can take control of it. There are experts in the market that can help you but it doesn’t start there, it starts with you as the consumer,” she explained.