Slow down on holiday spending

Just as you should try to anticipate what lies ahead when you drive, you need to be aware of your financial obligations for the coming year when you plan your finances over the festive season.

The holiday season is upon us, and people who are lucky enough to receive a 13th cheque or year-end bonus may find that most, if not all, their windfall has been frittered away before the season has ended. They will then face a long, frugal period until they get their next pay cheque, at the end of January.The South African Savings Institute (Sasi) has adopted the theme ‘Spend wisely, new year ahead’ as part of an education campaign to remind you to remain aware of your financial responsibilities next year.Sasi has partnered with the National Credit Regulator (NCR), the Financial Planning Institute and the National Consumer Education Forum to educate you about spending wisely.Prem Govender, the chairperson of Sasi, says it is unfortunate that year-end festivities often turn into a ‘season of mindless spending that can and does get out of control as consumers spend money like there is no tomorrow’.The recent financial crisis has left many countries, including South Africa, with a declining level of savings and increased unemployment, she says.’These economies are now struggling to regain their pre-crisis growth rates. In South Africa, growth in real gross domestic product increased from a negative 2.8 percent in the second quarter of 2009 to 3.2 per cent in the third quarter of 2010, while gross domestic savings increased marginally from 15.3 per cent this time last year to 16.9 per cent in the second quarter of 2010,’ she says.Govender says people do seem to be cutting back on their expenditure to some extent but are still not saving. ‘Household savings as a percentage of household income has moved into negative territory because people are spending more than they earn, but this has improved marginally – moving from a negative 0.4 per cent in the second quarter of 2009 to 0.2 per cent in the second quarter of 2010,’ she says. – iol.co.za