The festive season is slowly approaching and in most cases, South Africans purchase their holiday on credit. This is problematic because it can take up to six months to pay back.
Nolene Parboo; Senior Manager: Savings and Investments advises consumers to try and save in advance as this will help lighten the financial burden.
She offers the following ten tips to help get you started:
1.Look at your existing budget
The first place to look for extra cash is in your existing budget. We often waste a lot of money on impulse and convenience buys such as fast foods or that new gadget on the market – so start by reviewing your bank statement to see where you are able to cut costs. This will help free up some cash.
2. Open a separate savings account
Consider opening up a separate savings account – one whereby the bank needs notice in order for the funds to be withdrawn. Transfer a set amount of money each month into this account. Not being able to obtain the cash immediately will help ensure you don’t dip into your savings or buy on impulse.
3. Work out how much you will need to save
Estimate how much the holiday will cost to give you an idea of the amount you will need to save. Knowing how much you need to put away each month increases your chances of reaching your goal. Having a set monthly amount in mind will help keep you focussed. It’s no good saving R200 per month when you need to save R1000. This process will also help to manage your expectations and encourage you to look for affordable options.
4. Save without spending
If your leave times are flexible, consider going away out of peak season- as this can help you save as much as 50%. Consider an all-inclusive trip or package deals as they offer great value for money and will help you to stay in budget. Also review your bank’s rewards programme which often offers specials or discounts for travel.
5. Sell unnecessary or unwanted items
Consider selling unwanted items that are no longer needed. You will be surprised how much you can earn out of items gathering dust in the garage. Run through each room and collect as many unused items as possible.
6. Use the “Old money jar”
Take all the silver coins you have at the end of each day and put them in a container. Consider even breaking notes from small purchases to collect as much change as possible. Do a tally at the end of each month to see if you are on track. The trick is to avoid exchanging the coins at the bank until you need the money. Converting the coins into notes often tempts us to spend the cash. Consider getting the family involved by giving each member their own jar and running a competition to see who can save or collect the most amount of change.
7. Use your own bank only
Withdraw money directly from your bank as withdrawing from another bank is costlier and fees can add up quickly. Review your accounts to ensure they are optimised fully, take the time to talk to your financial consultant and go through your accounts to see if you can streamline them. Using the right account for your needs can save fees. Also ensure you are not paying debit orders for services no longer required.
8. Look at the way you use your car
Frequent unnecessary short trips can hike your petrol bill. This may sound extreme, but if you are driving a car with a big 4 litre engine, by scaling down to a 2 litre car – will not only help free up to R2000 per month of your petrol bill, but also cut on insurance costs.
9. Stick to your current phone if it works
Consider keeping an existing phone – why change to the newest phone and incur an additional unnecessary expense if it works perfectly well? Avoid having more than one contract at the same time. Saving a few extra thousand rand spent on a device during the year will give you extra days of holiday or assist in paying for daily expenses such as meals while away.
10. Be realistic about what you can afford to do
Remember that money spent on credit is borrowed from the bank which needs to be paid back. If you can’t afford an expensive vacation, consider an alternative way to relax. While an opulent vacation creates good memories, selfie opportunities and fun Instagram pictures, huge bills will create an unpleasant and stressful financial burden upon your return.