THE most common hangover from the festive season is the debt from overspending.
“A large amount of people started off the new year in debt due to excessive spending over the festive season and this has a ripple-on effect for much of the year ahead,” said Bruce Fleming, certified financial planner and the Financial Planning Institute’s 2016 financial planner of the year told SunMoney.
He said people should avoid the year-end debt spiral by making sure that they didn’t buy on credit.
“Studies have shown that people find it more difficult to part with cash as opposed to using a credit card, so using only cash is a method of discouraging you from unnecessary purchases,” he said.
Fleming shared the golden rules of smart shopping.
- Compare prices and only settle for the best price, ignoring brand names.
- Before you do your Christmas shopping, decide on a budget and more importantly, stick to it.
- Make a list of everything you need to buy. If it’s not on the list, don’t buy it.
Instead of buying something you don’t need, consider doing the following with your bonus:
- Save it for a rainy day.
- If you do have a retirement annuity, consider putting 15% of your bonus into this saving to boost your retirement savings.
- Put some money towards your most expensive debt, for example, personal loans or credit card debt.
- If you are paying for a home or car, put some money towards your bond or car repayments and pay your debt off sooner.
“Poor money management over the festive season can cause big problems for consumers in the new year. If you don’t plan, your debt may overwhelm you,” he said.
