Five Pro Tips For Responsible Holiday Financing


As we reach the jolly end of another festive period, millions of households will have wrestled with covering the rising costs of gifts, family celebration meals and holidays – putting increasing pressure on those already struggling with rising living costs.

This guide has been collated with advice from the credit provider Wonga South Africa, who reports that on average, post-holiday loan activity increases significantly and from over eight thousand customers interviewed last year over fifty percent said they spent less money in 2022 than the previous year. It is with this information in mind that the loan company is sharing suggestions to ensure you keep a firm grasp on your finances and avoid allowing future holiday seasons to leave you deep in the red.

1. Only Borrow for Essentials

The reality is that many of us choose to pare back celebrations when we do not have the funds to pay for lavish presents or decadent meals, and borrowing should be reserved for essential items.

Statista, the data collation organisation, shows that 48% of South Africans choose to purchase gifts during sale events such as Black Friday, which can be an opportunity to buy festive items at a significant discount.

Looking for promotions, offers, and discounted periods may be far preferable to taking on short-term debt for high-cost electronics, so being a little savvy can be a better solution.

2. Create a Household Budget

Budgeting is a relatively simple process, but getting started is the first hurdle – once you have a monthly budget, you can tot up additional costs or assess where you have been able to make savings.

It is also important to use a budget, even if that is a simple list of outgoings because if you can clearly see your debts, you can begin to prioritise payments based on those with the highest interest charges.

3. Avoid Heavy Interest Store Cards

When we're out and about, applying for a store card is often seen as an advantageous way to either access a percentage discount or defer paying for a festive shop – but the issue is that account charges and interest fees can multiply the total cost.

RCS reports that store cards might encourage you to sign up with a 20% discount – but you'll pay an average of 24.15% in interest, and those charges begin immediately.

4. Pay Back Loans Before Saving

A nest egg or contingency budget tucked away can provide enormous peace of mind but may be a false economy if you have outstanding debts.

With fluctuating interest rates, the earnings you might expect to make on savings held in a bank are far less than the interest you will pay on borrowing, so it is wise to pay back loans before you start contributing towards your savings pot.

5. Use a Responsible Lender

If you need to take out a loan, perhaps to help finance holiday spending in advance of a paycheck, you should do your sums beforehand and use a regulated lender with the expertise and support to steer you through the best options.

Before signing a loan agreement, it is recommended that you:

  • Understand what the repayments will be, when they fall due and the total amount you will be required to pay back.
  • Reassess the total loan requested and ensure you are not applying for more than you need.
  • Check your budget, income and other expenses to ensure you have the earnings available to keep up with your loan repayments.

The ideal is to reassess your planned spending, and avoid debt where possible, to ensure you don't end up still paying for the festive season in months to come.

However, if you need a loan, the quality and reputation of your lender are key factors to ensure you have control of your finances and make informed borrowing choices.

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