Reward yourself wisely this holiday season

As the holiday season approaches, many of us look forward to taking a well-deserved break and rewarding ourselves for a year of hard work.  

This article explores how to reward yourself wisely, stick to a spending plan so as not to splurge, and avoid end-of-year debt.

Tip: Don’t let debt stand in the way of a well-deserved holiday. Learn more about debt consolidation here.

Work a bonus into your budget

If you are fortunate enough to receive a year-end bonus, it may be tempting to spend it all on your enjoyment. However, it’s important to be financially prudent, says Cheryl van Rooyen, a certified planner at Efficient Wealth.

“Whether you get a December bonus or a thirteenth cheque, or you put aside a few rands every month in your build-up to the end of the year, think before you act,” she says.

A windfall should be incorporated into your budget and spent accordingly. It’s wise to view this as an opportunity to stabilise your finances, rather than a licence to splurge. Wayne Mostert, director of ASI BestSure, suggests deciding in advance the percentages of your bonus that can go towards your debt, savings, and vacation spending.

“Once you have decided, follow through. Second thoughts catch up with your decision before you know it, especially when it comes to saving and settling debts. There is always something else you would rather do with the money,” he says.

Prepare, and stick to, a holiday spending budget

Despite our best intentions, many of us leave our budgets at home when on vacation, and approach or exceed our credit card limit. 

Before you go away, draw up an easy-to-follow allowance that includes enough money for enjoyment, so that you won’t feel deprived. Investigate affordable ways to treat yourself, such as opting for activities within walking distance to avoid using fuel, or booking an hour-long massage rather than a half-day spa visit.

“Calculating how much money you can set aside, and what you can do with it daily, makes it easier to stick to your holiday spending plan,” says Mostert.

“If you have a certain amount available per day and you want to splurge on a costly family outing, spend a bit less for a couple of days so you can spoil your family as planned. That way, you can have a good time and come home knowing your finances are still under control.”

Reward yourself by saving on interest

Most people are accustomed to living with debt, but saving on interest and shortening your loan term are great ways to reward yourself, says Van Rooyen.  

Consider the following example. A bond of R1 million will cost you R2,276,440 over 20 years at an interest rate of 9.75%. A once-off extra payment of R5,000 will knock almost R30,000 off your bond and seven months off your repayment term. 

Mostert says paying off your credit card debt will take a load off your shoulders and lighten the holiday mood. “Keep the facility open, but lower your spending limit and try to use it for emergencies only,” he recommends. “An emergency fund is a good alternative and will earn you interest.”

Invest in yourself

Buying possessions that can be used or forgotten about within a week may bring enjoyment. However, pursuing a hobby you have always thought of as a little bit expensive can bring lasting rewards. Mostert points out that investing in yourself by learning something new will enhance your life in ways a disposable asset can’t.

Not all hobbies are pricey beyond an initial outlay, and you may be able to earn some cash on the side if you become proficient at your chosen activity, such as photography, drawing, or knitting.

Financial planner Sylvia Walker, author of Smartwoman: How to Gain Financial Independence and Create Wealth, says you should also reward yourself with the gift of time.

“We so often rush around juggling responsibilities. Having time to focus on our home and family at the end of the year is invaluable,” she says. “Don’t spend the season shopping and running around – enjoy some quality time at home with your children.”

You can save money with a “staycation” and recharge your batteries with short, inexpensive outings. “A trip to the nursery, a spa treatment, or wine tasting with friends doesn’t cost a fortune, and is a lovely gift to yourself,” she points out.

Don’t spend January’s money in December

This tip is for everyone, but especially those with school-going youngsters. Most people receive their December salary long before the end of the month, which can create temptation to spend.  

Put an intended amount aside for January so you are prepared, advises Mostert. “Keep in mind school fees and uniforms, restocking your kitchen cupboards, and the fuel or transport you will need to get to work once the festive season is over.”

Tip: Need a loan to tide you over until the new year? Click here to find out more.