5-Steps to being Financially Savvy This Holiday
Your browser is out of date. It has known security flaws and may not display all features of this websites Click Here to Update

Bayport Blog

How to be financially savvy over the holiday season

Published: March 6, 2020
Categories: financial literacy
Tags: Financial Planning, Financial Tips
How to be financially savvy over the holiday season

The holiday season means fun, festivities and spending special time with friends and family. However, many people’s financial state has not yet fully recovered after the festive season and back-to-school expenses, by the time the April holiday season arrives which is once again a time of year that brings with it more hefty financial commitments such as holiday trips, easter-egg shopping, extravagant meals and entertainment expenses.

“One of the main problems at this time of year is how to prioritise your spending”, explains Tessa Verwoerdt, HOD Money Solutions Centre at Bayport Financial Services, South Africa. But the best approach is to plan your personal financial budget in advance so that you can consider it objectively and set money aside to cover all the important costs.”

Necessities over Luxuries – the key to better financial planning

When deciding on what the important financial expenses are, most people lose sight of the difference between a ‘necessity’ and a ‘luxury’ at this time of year.

What is a necessary expense?

  • Accommodation
  • Transport
  • Food
  • Education
  • Medical
  • Water
  • Electricity and
  • Maintenance

What is a luxury expense?

A luxury expense is when you are spending money on something that you can really live without such as:

  • DSTV or Netflix subscriptions
  • Eating out at restaurants
  • A pair of fancy sneakers

“It may not seem like a luxury,” explains (Tessa), “but the reality is that these items generally are classed as ‘wants’ not ‘needs’, meaning you really can live without them.”

To help you keep control over expenses that can so easily run away from you this holiday season, Bayport suggests the following five-step approach to financial health:

  1. Track your spending habits Tracking is about understanding your spending habits. By keeping a record of everything you spend over a 30-day period you can get a clear picture of where your money goes. Ask the Bayport Money Solutions Centre team for the Monthly Financial Budget Planning Tool
  2. Compare your income and expenses

    Then look at how much money you spend on necessities and how much on luxuries and compare your income with your expenses. Your income must never be less than your expenses. If you do have debt, either in the form of a personal loan or an overdraft, you should factor in how much your repayments cost you each month.

    Once you have the complete picture of your income vs. expenses, set yourself some goals relating to your upcoming expenses and how much more you think you’ll need and by when. Another important tip is to match your financial planning to your salary date so that you can make sure you’ll receive your income in time to cover the expenses you anticipate.

  3. Prioritise important expenses Considering your financial goals, prioritise which expenses are most important and where you want your money to go. The necessities and debt costs will always feature on this list, along with once-off necessary expenses. Work out what these necessities are likely to be and see where you can save money to make up for any potential shortfalls.
  4. Act on your financial plan Finally, and most importantly, you must act on your plan. Many people develop a financial plan but, when caught in the moment, they forget about it and justify the unplanned expense. “This is where great budget planning can unravel and leave you in real trouble after the holidays,” says (Tessa).
  5. Review your personal budget While you can’t anticipate every expense, if you do find yourself spending money on unplanned items, review your personal budget as soon as possible to see where you can make a saving so that you don’t get caught out later. It’s all about regular financial planning and budget management and making your money work for you.

Of course, the best approach is to save for the holiday season. By implementing the four steps diligently, you can work out how much you will likely need and start saving a small amount every month so that you have your holiday fund by December.

If, however, you do not have time to save and your tracking indicates that you may need to apply for financial assistance in the form of a short-term personal loan to make it through the months ahead. Remember, it’s important to only borrow the amount of money you need, carefully distinguishing your ‘needs’ from your ‘wants’.

Go back

Your information is important to us and where we gather your information it will be in accordance with our information Privacy Policy