10 money mistakes to avoid during the holidays

It’s that time of year again – piped Christmas music is playing in shopping malls and tills are ringing as customers spend, spend, spend. But come January, many people won’t feel very merry when their credit card bills arrive. Here are 10 mistakes to avoid if you want to go into the new year on a firm financial footing.

YOU DON’T PLAN PROPERLY

If you budget – in other words see how much money you have and plan how you’ll spend it – your chances of falling into the trap of overspending are significantly smaller.

So draw up a holiday budget well in advance. The biggest expenses during the holidays are travel and accommodation, gifts and entertainment (including takeaway meals or eating out).

Work out exactly what your expenses will be. If you see that you’ll struggle to stay within your budget, shift the parameters – go away for a shorter period, say five days instead of 10. When you’re shopping, stick to your list. And don’t take your kids or friends along who might convince you to spend more.

YOUR REGULAR PAYMENTS FALL BEHIND

If debit orders don’t go off due to a lack of funds in your account, the bank can fine you an amount for each declined debit order. Make sure there’s always enough money in your account to cover your debit orders.

Some people skip a mortgage or car payment and blow the money on their holiday instead. This means they go into the new year on the back foot and will struggle to catch up. Also, missed payments show up on your credit record and can negatively affect any future loan applications.

YOU BUY GIFTS FOR EVERYONE

It’s fun to spoil your kids and loved ones – but you shouldn’t splurge to the extent that you can’t cover your other bills. Shorten your gift list – don’t feel obliged to give to all and sundry. Save even more by gifting your talent or time rather than spending on store-bought gifts.

YOU OPEN UNNECESSARY STORE ACCOUNTS

It can be hugely tempting to get a store credit card to qualify for special discounts and offers. But this type of credit is worth it only if you pay your debt within the interest-free period, otherwise it becomes very expensive shopping.

YOU CANCEL YOUR INSURANCE

You might think you can use the money for your holiday then reapply for insurance later. But it’s not worth the risk. If your house is broken into while you’re away, it’ll end up costing you a lot more than one month’s insurance premium to replace everything. Also, there are a lot more cars on the road during the holidays and people sometimes drive under the influence – increasing the accident risk. That’s why your car insurance is also important.

To save on insurance in the long run, rather make security improvements to your home or car, which will lower your monthly premiums.

YOU BLOW YOUR BONUS

Don’t spend it all in one month. Use it wisely. Allocate a portion for festive-season spending then set aside the rest. You can use it to pay off some debt, for example, or to cover crucial January expenses (such as the kids’ school supplies).

YOU FORGET YOUR LOYALTY BENEFITS

The holidays are a good time to use all your loyalty benefits, such as special in-store discounts for loyalty programme members, or cash back on your Clicks Club or Pick n Pay Smart Shopper cards or the eBucks you’ve earned.

YOU’RE TOO TRUSTING

Fraudsters cash in during the holidays because people are in a festive mood and tend to be more generous or laid-back. If you receive a text or email saying you’ve won something, be careful – even if it seems to be coming from your bank or a wellknown company. The catch with these “unexpected prizes” is usually that you’re asked to pay a deposit, tax or administration fee before receiving your prize. Remember, legitimate competitions will never require you to pay anything before you receive your prize.

YOU FORGET YOU HAVE A KITCHEN

People tend to spend more on takeaways and restaurant meals at this time of year. You’ll save a lot if you opt to eat more meals at home. Or organise a potluck or bring-and-braai with your friends if you want to socialise.

YOU LEAVE YOUR SHOPPING FOR THE LAST MINUTE

If you plan ahead, you’ll have time to hunt down the best prices. If you leave it too late, you might end up paying more for the same item or buying unnecessary gifts in haste. People tend to make mistakes when they’re in a hurry, so keep all your till slips so purchases can be exchanged later if necessary.