Black Friday is one of the biggest shopping phenomena to ever hit our shores. But before you think about taking part in this spending frenzy, make sure that you plan to avoid incurring unnecessary debt.
The fourth Friday in November is a much-anticipated opportunity for shoppers to splurge. Known as Black Friday, this shopping extravaganza sees retailers slashing their prices significantly in a bid to rake in sales ahead of the festive season.
According to BankservAfrica, last year’s Black Friday and Cyber Monday were the biggest in South Africa to date, with more than seven million transactions processed – a 36% increase from the 5.2 million transactions in 2018 – and more than R6 billion incurred in card transactions. In retrospect, 2019 revealed that many consumers didn’t realise the precarious state of South Africa’s economy, even before the onset of the pandemic.
With the advent of Covid-19, the country’s economy has taken a further knock, leaving some consumers under more financial pressure. Many have lost their jobs and some had paycuts, while others find themselves financially responsible for more family members. Perhaps more than any other year, this year’s Black Friday will force us to look at our spending habits a little more closely. It has become increasingly important to improve our financial health and security by understanding patterns and behaviour in how we spend, save, and incur or manage debt.
Findings from the Momentum/Unisa Household Financial Wellness Index indicate that South African households’ real net wealth declined as a result of the economy, and will worsen as a direct consequence of the effects of Covid-19.
The index found that consumers are more concerned about their finances, with around two-thirds of respondents feeling that they should try to save money where they can, and avoid frivolous spending.
While we all want to cultivate healthier money habits and improve our financial knowledge, we often forget that a spending habit is just that: a habit. With consistent and conscientious effort, all ‘bad’ habits can be undone.
Once you understand the effect of your spending habits on your financial security, you’ll be in a better position to make sensible choices that work for you and your family.
Here are a few tips to help you avoid the debt trap, this Black Friday and beyond:
Know your financial health
First, take an honest look at your finances. You might believe your financial position is healthy. However, is this truly the case? Compare your monthly income to all your expenses. The comparison can include automatic debit orders and monthly payments like rent and bank charges. It’s important to have a clear picture of these expenses to ensure that you’re appropriately prioritising your spending and not living beyond your means.
Budgeting can help with this. The Momentum/Unisa Household Financial Wellness Index found that financially well households are 20% more likely to have a written budget (handwritten or electronic) than their financially unwell counterparts.
Using digital tools make it easy to identify negative spending habits by tracking and categorising your expenses. These will help you keep track of the money that you save, and seeing the rewards of your actions will encourage you to save further.
Do not buy on impulse – rather plan before you purchase
Don’t fall into the trap of buying on impulse, especially when faced with one of those ‘not to be missed’ deals. Where Black Friday is useful is in an instance where there is something you’ve been planning to purchase for a while.
Make a list of the things you need, and on the day, be prepared to hunt for a good deal on those specific items only. Do not buy anything that is not on your Black Friday shopping list. When shopping online, you can prepare in advance by saving the items you would like to buy to your wish list, and adding them to your cart as soon as the discount is applied.
Use your rewards programme’s discount or cashbacks
For all the necessary Black Friday purchases, use cashbacks or discounts from rewards programmes like Momentum Multiply. You can purchase travel tickets, bulk groceries, or wearable gadgets from your rewards programme’s partners to maximise your Black Friday savings. These discounts can go a long way in saving you money on holiday gifts, or for those rewarding experiences you want to create for your loved ones.
Think ahead before you swipe
Before you get caught in Black Friday fever, consider purchasing back-to-school items now so you can enjoy the festive season knowing your essential January expenses are covered. Spending on essentials first will also help you promote good money behaviours for your loved ones. The journey to a rewarding future begins with a good financial plan and sound decisions.
Shop around for the best deal
Just because it’s Black Friday doesn’t mean that all shops have the same discount for the items you are looking for, so compare prices. This is relatively easy to do online and ensures that you avoid the long queues at shopping malls. This is also far safer when there is still a pandemic to contend with.
It’s important to spend your money wisely. Always avoid unnecessary debt, whether it’s Black Friday or any other occasion. An important part of good spending is planning, which means only purchasing items on your budget. Take a closer look at what you are buying to see if it falls in line with your budget and avoid getting pulled into ‘unmissable deals’ on items you wouldn’t ordinarily purchase.
Kim Mopelong is Multiply Money’s product head.