As the festive season approaches and South Africa experiences a boost in economic optimism following recent interest rate cuts and lowered consumer inflation, major retail outlets are gearing up to entice shoppers. However, it's crucial to remain vigilant about pricing and promotions during December to avoid unnecessary debt in the New Year.
Despite increasing consumer interest, shoppers must be aware of potential price manipulation tactics employed by retailers. During this festive period, many outlets utilise "loss leaders"— a strategy where products are sold at a marginal loss to draw customers into the store.
Denise Neethling, head of marketing at Earned Wage Access (EWA) company Paymenow, notes: "Retailers use strategies like loss leaders because they know once shoppers enter the store, there is a good chance of them filling their trolleys with more items they didn’t initially intend to buy."
Furthermore, with the New Year around the corner, consumers must consider the upcoming bills and premium hikes January brings. "To successfully avoid falling into a debt trap during the festive season, it's important to plan for December and also look ahead to January and beyond," advises Neethling "As we anticipate increases in household premiums, such as medical aid, and with accelerating inflation impacting shopping costs, being mindful of our financial decisions is key."
Here are Neethling’s top tips for managing your budget over the holidays:
1. Don’t Neglect Your Budget: Analyse your income and expenses from the previous month, then plan your festive spending, accordingly, ensuring you won’t miss any bills, repayments, or incur debt.
2. Plan your spending: Write down your household’s essential purchases and research prices at various shops. Ensure you purchase these items first, then use any remaining funds for non-essentials.
3. Shop Online: Online shopping minimizes temptation by helping you stick to your prepared list. Choose retailers that offer home delivery at no extra charge.
4. Don’t Leave It to the Last Minute: Shopping last-minute often leads to higher prices. Stock up during sales to avoid last-minute gift buying.
5. The Gift of Giving: Set family guidelines for gift-giving, such as limiting gifts to children or organizing a Secret Santa, to keep holiday spending in check.
6. Use Your Rewards: Sign up for rewards programs and leverage accumulated points to make your festive shopping more budget-friendly.
7. Don’t Borrow: Resist the urge to use credit cards or loans for holiday spending. If needed, consider discussing early wage access with your employer instead of borrowing.
8. Teach Kids About Money: Use the festive season to instil financial literacy in children by emphasising the value of giving and appreciating simple joys.
9. Plan for January: Be mindful that January often has extended expenses, including back-to-school costs requiring careful planning to manage.
10. Refresh That Budget: With the new year approaching, reassess your financial goals and budgets. Establishing a physical budget can help you visualise expenses and identify savings opportunities.
“As the saying goes, “a goal without a plan is just a wish.” With thoughtful planning, you can avoid falling into the festive season debt trap and enter the New Year with greater financial control and readiness for the opportunities ahead,” concludes Neethling.
PERSONAL FINANCE