SIKI MGABADELI: With the festive season drawing close, South Africans are already planning for the holidays with pricey family gatherings and Christmas shopping on the cards, it’s important that we make wise financial decisions. So today we are going to try and tell you how to survive the festive season financially.
We are speaking to Craig Whittaker, who is head of product at Wonga SA. Craig, I must say, I think it might be too late for some of us.
CRAIG WHITTAKER: But there is always next year.
SIKI MGABADELI: Let’s plan for next year. Why is it that we spend so much at this time? Is it just pure relief and happiness?
CRAIG WHITTAKER: I think it’s a mixture of happiness and emotions, as well as it’s a time of year when hopefully you get a bonus or you get paid a little earlier, and so you feel wealthier than you actually are.
SIKI MGABADELI: So let’s talk about some of the traps then that people fall into which we need to avoid as we go into the season.
CRAIG WHITTAKER: I think the first thing is – and we still have time before this year’s Christmas – is to absolutely focus on drawing up a budget and to absolutely track your spending as well. Tracking your spending is just as important as having a budget. There is no sense in having a game plan and not actually sticking to it.
And then I think there’s also the emotional element where you need to be aware that is a happy time. You want to spoil your friends and loved ones. You need to temper that with a bit of sound financial thinking.
SIKI MGABADELI: Okay, we’ll get to the sound financial thinking in a second, but the tracking of your spending – there are practical things there. I know when I buy stuff I tend to stick the receipt thing you get at the shop into the bag, and then I kind of throw it away with the bag. So one doesn’t pay attention to what they’ve bought, how much one has spent, when actually you should if you are sticking to your budget.
CRAIG WHITTAKER: Absolutely. I make use of a financial app called Wally, and just the single act of capturing that spend yourself on your cellphone whilst the cashier cashes up your purchases already makes you that much more aware of what you are spending – and so you are more in control. And when you are in control you tend to spend less.
SIKI MGABADELI: And it’s also putting aside money for January, because we know what happens. You were paid earlier in December, therefore the salary you are used to coming in at the very last day of the month is not going to happen.
CRAIG WHITTAKER: Yes. Pay yourself first, work out what your expenses in January are going to be – your rent and those sorts of things – and try and put that money in a separate account or put it somewhere where you can’t use it. Draw it out of the bank if you have to and keep it for January, because I think that’s where most people get caught out. It’s not really in December for Christmas, it’s around the 20th January where suddenly you are not sure why you haven’t as much money as you need to see you through to the end of the month.
SIKI MGABADELI: And do you find that people then borrow more in January?
CRAIG WHITTAKER: We do see an increase in borrowing in January for exactly that reason. And so if you can put the money aside in December then hopefully you can go into the new year without having to take on more credit or debt.
SIKI MGABADELI: Thanks, Craig. I hope that that helped you a little bit. I hope it’s not too late for you.