Tips on how to stretch your wallet

Posted on November 29, 2018

The holidays are rapidly approaching, and the end-of-exam season is finally in sight. To help us manage the long summer break ahead, Tukkievaria caught up with Prof John Hall, Head of the Department of Financial Management in the Faculty of Economic and Management Sciences, for some pointers on how to manage our holiday budgets.

What is a common finance pitfall to look out for over the holidays?

Try to avoid overspending. It’s so easy to spend too much – one often gets caught off guard by how quickly a list of items add up to a substantial final amount, whether it’s groceries or a restaurant bill. So distinguish between “needs” and “wants” – but do spoil yourself a little!

What do you think about Black Friday, the US spending frenzy that’s taken SA by storm over the past few years?

If you’re aware and knowledgeable about the prices of the specific items that you want to buy, you can definitely save some money by buying intelligently and prudently!

How can we plan our holiday budgets to ensure that we’re financially responsible?

It’s all about setting an amount that you can afford to spend after compulsory expenses (instalments, municipality, insurance, etc.) have first been paid. I’m describing the process of determining your discretionary income that you can spend.

What sort of personal finance habits can be practised throughout the year in order to have a bit of money for the holidays?

Prioritise your monthly expenditures and be disciplined about it. For example, buying lunch at work instead of bringing your own could cost you a substantial amount of money over a long period. Planning your transport to minimise the cost of fuel can also save you a sizeable amount. And set aside a monthly amount (as part of your compulsory payments) to save before you start to spend on other “wants”.

Tell us a bit about debt traps.

Life has become expensive, and debt has become easily accessible. In fact, financial institutions are very eager to lend you money – after all, that is how they generate profit. Refrain from borrowing money for living expenses; access debt only to acquire assets, else you may well fall into a debt trap in which you end up borrowing to repay other debts!

You can save money if you buy intelligently and prudently, says Prof John Hall. 

At this time of year, staff are paid earlier in December, then at the end of January – any tips to manage this situation?

Don’t start spending too early and too much! Determine a fixed spending amount to which you must stick, or you’ll have a bad case of “Januworry”…

Do you expect any major price hikes in the new year, such as increasing fuel costs, which then have a knock-on effect on other prices?

On 22 November, the Reserve Bank increased interest rates, and possibilities for further increases are looming. Although the fuel price will decrease at the beginning of December, further increases in 2019 will probably take place. All indications are that 2019 will be a difficult year to navigate financially, but spending discipline and fiscal conservatism can carry you through. 

Do you have a final message for staff?

Enjoy yourself over the holidays. Relax, and stay out of murky, troubled shark-invested waters!

- Author Shakira Hoosain

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