With the festive season well underway, the one thing most South Africans can agree on is that this period tends to worsen their spending habits.
And for many workers, particularly in African communities, this can be disastrous for their financial wellbeing. As spending tends to go up, budgets are stretched to their limits. Additionally, this can also mean incurring debt out of necessity for some.
Two men based in Mfuleni, Cape Town, who are the heads of their respective families, share how the December season influences their spending habits, as well as what consequences this period tends to have on their financial wellbeing.
Siyasanga Ndyike (28), a wine sales consultant at Alto Wine Estate in Stellenbosch, admits this time of the year usually comes with its own financial burdens as expenses are usually concentrated towards his family back home in Idutywa in rural Eastern Cape. And for him a monthly salary of between R7 500 and R8 000 coupled with having to support two children doesn’t make financial decisions easy.
“I would say my family affects my spending habits more than anything else during this time of the year because, firstly, I have children – two of them in fact. Secondly, I have younger brothers who I’ve had to financially assist every year-end when each of them had to go to initiation school. And to add to that, in my family there is a ceremony we must host each December. I spend a lot of money on that too,” he explains.
While he believes saving is a good way to better prepare for one’s financial obligations, he concedes that it’s not as simple in practice as it’s often made out to seem. “I don’t find it easy to save in times leading up to this period because I often find that my expenses can total up to 90% of my monthly income. But I feel that at a later stage I’ll get better at it if I make a few changes here and there,” he says.
Intern auto-electrical engineer Zingisa Mandoy (26) admits his financial child-support responsibilities go up this time of year as he must buy his two-year-old son clothes for Christmas as well as take him home to in the Eastern Cape to visit his grandparents. “In my case, since it’s December, most of the time my biggest expense – since my family is based in the Eastern Cape – is money for transport plus extra since I have a child. He’s not that old but I still need to buy him clothes for Christmas and I must take him home to visit my family,” he explains.
Zingisa says he may take on a bit of debt in order to ease expenses this year because there’s still an upcoming family ceremony that will need him to be financially involved. The reason behind this decision is that he got married early last month.
Properly managing one’s debt during the festive season can determine a lot about the outlook of one’s finances going into a new year, says Ester Ochse, product head of money management at FNB. Foresight becomes very important in this regard.
“It is important to manage debt to ensure that it doesn’t become a major burden for you in the year ahead. What is important is not to get into a worse debt position over this period. If you’re fortunate to get a bonus during this time, it is important to use some of it to pay off some of the short-term debts. Always consider using the 80/20 principle. Use 80% of your bonus properly by paying off debt and saving for emergencies and school fees for next year. You can then consider the 20% to reward and spoil yourself,” she explains.
Though it may seem tempting to do so, Ochse also cautions against taking up too many financial responsibilities during this time of the year and advises consumers to take advantage of all available avenue’s that put them at ease financially.
“This is a great time to re-assess your personal financial position. Look at the budget for the year ahead. Ensure your will is updated. Look at your debt position and where you can start managing it better. Make sure your short-term and long-term insurances are up to date. Check that your retirement is on track. Also check where you can use your reward programmes to supplement your spending where possible, such as eBucks, she concludes.