Don't let festive spending give you a financial 'hangover' in the New Year

’Tis the season to be jolly, but many South Africans may feel more trepidation than delight as the celebrations of the festive season loom. That's because they know “the best of times” can be followed by “the worst of times” and — to keep misquoting Charles Dickens — if they're not careful with their spending, they're likely to be visited by the “Fiscal Ghost of 2022" in the new year.

“It is easy to fall into the trap of spending when we're in a holiday mood [and there are sales and Christmas gifts to buy],” says Prof Jaco Fouché of the School of Accounting Sciences at North-West University (NWU). Remember, though, he cautions, “retailers are there to make a profit, and their advertising is focused on getting consumers to spend money”.

Another reason people might be more likely to indulge in reckless spending as the end of year approaches is because they're feeling physically and emotionally tired, says Fouché. This is especially true in 2022, given the exceptional circumstances we've experienced over the past couple of years, with the Covid-19 pandemic, riots and the economic turmoil worldwide.

“Some people are emotional eaters, others become emotional shoppers. Now that you're [feeling] emotionally [drained], you can easily make big financial decisions or purchases that you may well regret in the new year,” says Fouché.  

The good news is that with some foresight and some sound advice, you can still enjoy the festive season without blowing the budget, and adopt habits that'll ensure your financial future looks much brighter in 2023.

Some of the best advice Fouché has ever got was from his father-in-law, who said: “You cannot save money when you are spending it.”

He explains: “Retailers often announce specials and savings [in the festive season]. These [offers] may well be legit, but if you were not planning to buy something in any case, you are not saving — you are still spending money, just a little less.

“However, you can also use [special] offers to your advantage. When you spot real bargains — often after the holiday season — you can, for example, use the opportunity to buy gifts for the birthdays coming in 2023.”

Another practice Fouché encourages is to track your spending. “Most people do not know what they spend their money on. Do yourself a favour and track your spending for three months. That will be an eye-opener for most people and may just be the motivation you were waiting for to change your spending patterns.”

The best advice, says Fouché, is to take responsibility for your own financial literacy. “Buy one book a year — and there are many — about personal finance, read it and implement what you have learnt. You will be amazed at the progress you will make over five years.” 

The sad truth is that many South Africans are not sufficiently financially literate, which is something the NWU School of Accounting Sciences hopes to address. It plans to offer a short learning programme in personal financial management in collaboration with the NWU Business School.

“I can honestly say that the School of Accounting Sciences cares about its students and we care about quality. We measure this in the satisfaction of our students with the student life they experience, as well as in their performance in the national and international professional examinations.”

As a new year beckons, resolutions for 2023 will abound in conversations, but perhaps the most prudent resolution will be a resolve to make your financial future a literate, secure one. 

This article was paid for by North-West University.