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