With just over a month to go before year-end holidays, many South Africans are feeling the pressure to plan their festive finances. After all, the holidays can bring joy, but they can also bring debt.
According to Wonga’s Annual Summer Spending Survey, holiday spending in South Africa was set to reach a staggering R224 billion last year. Food and beverages alone made up over a third of this budget, with 33% going toward these expenses.
Director and head of legal at MiLaw Legal, Rynhardt de Lange, warns that, as December approaches, most people aren’t financially prepared to tackle holiday spending.
“Only 37% of South Africans had savings set aside for the festive season last year, as per the Wonga Summer Spending Survey, and this was down from 40% in 2022. Instead, many relied on anticipated year-end bonuses (44%) or turning to credit cards and loans, which saw an increase from 27% to 32% last year,” he shares.
“Moreover, the NIQ Holiday Outlook Report highlighted that 42% of South African consumers felt financially worse off than they did a year ago. This reliance on credit can lead to starting January with a hefty dose of ‘holiday debt hangover’.”
To avoid a repeat of past years, consider a ‘financial detox’ approach: a last-minute, targeted strategy to keep spending in check while still enjoying the festivities.
Take on a financial detox challenge
Similar to a health cleanse, a financial detox focuses on small, achievable steps that can quickly impact spending habits.
Here are a few simple yet effective approaches:
- No-spend November: Set a goal to cut out any non-essential spending. Limit eating out, put off impulse buys, and get creative with meals and entertainment at home. This can free up cash you’ll need in December.
- Subscription purge: Review your monthly subscriptions and cancel the ones you don’t use or which can wait until January. Streaming services, gym memberships or other recurring expenses add up over the month, and these small adjustments can lead to big savings.
- Cash-only weeks: Limit yourself to a weekly cash allowance for essentials like groceries. This simple switch keeps spending tangible and helps avoid overdoing it with a credit card.
De Lange cautions that while it’s tempting to cut out all extras, drastic measures often backfire. Instead, manageable habits can ease financial strain without feeling restrictive.
“Weekly budget check-ins are a great way to start: Monitor spending weekly and set mini-goals like capping takeaways or establishing a small daily savings target. These minor adjustments can build into meaningful savings over a month.
“If you do go over budget, a post-holiday spending detox in January can help get finances back on track. Begin with a no-spend week by using what you already have at home, whether it’s food from your pantry or low-cost entertainment options. In the second week, focus on paying down credit balances, even if it’s just the minimum payment.
“By week three, prioritise critical expenses like rent or utilities to ensure you have the essentials covered.
Finally, in week four, reassess your budget and create a ‘needs versus wants’ list to keep spending in check until February. These small steps can help rebalance your finances and ease any holiday debt strain,” concludes De Lange.
Image credit: rawpixel.com/Freepik