Curb your festive spending for a happier holiday season

For many of us, the festive season is full of temptations. This may include overindulging to reward ourselves for getting through another tough year, entertaining beyond our budget, or perhaps spoiling loved ones with expensive gifts.

End-of-year overspending can make us miserable, however, forcing us to face the new year with a limited budget.

We investigate ways to curb your festive spending while still enjoying your holiday.

Tip: Consolidating your debt can free up some cash for the festive season and beyond. Find out more here.

Why do we overspend?

We tend to feel that we and our loved ones deserve some spoiling in December, says financial planner Sylvia Walker, author of Smartwoman: How to Gain Financial Independence and Create Wealth.

However, we should think about rewarding our future selves as much as our present selves. This means keeping aside some money for “Januworry”, when cash reserves are notoriously low.

It’s easy to feel we are flush with cash if we receive a bonus or thirteenth cheque, or we get paid early in December, but this can cause us to put “wants” above “needs” as we hit the shops.

“Retailers are quick to capitalise and are very good at telling us what we need, whether we can afford the items or not,” Walker points out.

Multiple smaller purchases can be just as damaging to our financial well-being as a big outlay, so be sure to keep track of every expense, from movie tickets and a beach bikini to takeout and new shoes.  

A budget helps you face reality

Ideally, you should start planning for the festive season a few months in advance to allow for some overspending, which is almost guaranteed. This is the view of personal finance content creator Nokuhle Kumalo, whose YouTube channel has 62,000 subscribers.

“A festive season budget is not just something you draw up at the beginning of the month, then stash away at the bottom of your laptop bag,” she says. “Instead, look at it as a guideline you can refer to at any time.”

Don’t forget to include January in your calculations, says Kumalo.

“A budget is about facing reality. When you receive your December salary around the middle of the month, it’s meant to last you 16 days in December and 25 days in January.

“This means your December salary should last you 41 days instead of the normal 30. The best thing you can do is put aside money for January as soon as you get paid,” she notes.  

She recommends listing expenses for December and January, including all food, gifts, decorations, fuel for travelling and other festive expenses, as well as regular monthly expenses. This makes clear whether you can splurge or you need to cut back.

Walker suggests keeping your budget lean. “Decide on an amount per gift – a present does not have to be expensive,” she says. Making gifts for others is also a good way to give without overspending.  

“Are you eating out on Christmas day, or are you making home-cooked food? Is everybody bringing something to eat? Decisions like these can make a big difference to your bank balance,” Walker says.

Manage family expectations

Discuss your festive plans with your direct family members so they know what to expect.

“For instance, agree that gifts will be small, and you will have a bring-and-braai at home,” Walker recommends. “South Africans are accustomed to bringing food and something to drink to family gatherings, which is part of the festive spirit, after all.”

Set a gift budget and see what each family member can find for the set amount. This can be a lot of fun.

Once your festive budget has been drawn up, stick to it. Do this right from the outset as tainting your credit score for a few days of enjoyment isn’t worth it, Kumalo says.

Should you spend your bonus on family and friends?

Receiving a work bonus doesn’t mean you have to entertain your extended family. Kumalo points out that any money you earn and bonuses you receive are direct compensation for the work you have performed.

“Others should not feel entitled to the money you have earned. Sometimes we set a precedent by spending bonuses on our families, which they tend to expect in the years that follow as well,” she says.

“It’s up to you to establish boundaries and to actively decide how you want to spend your money. Some people like to splash out on their family members, but don’t feel pressured into purchases. You are the one who will have to deal with the consequences.”

Tip: The festive season can be expensive, but a personal loan can help you make ends meet in the case of an emergency. Find out more here.