’Tis the season to spend wisely — here’s how to master your December budget

The approaching holiday season often sees increased expenditure and relaxed money discipline.

Last year, South Africans spent a staggering R7.7-billion during December, with alcohol and chicken emerging as top choices, according to the consumer intelligence specialist NIQ.

Read more: December consumer spending patterns – more cash, more groceries, less fuel and lots of booze

At a recent Daily Maverick webinar, Business Maverick editor Neesa Moodley, Farzana Botha, segment manager at Sanlam Risks and Savings, and Doret Jooste, the head of money management at Standard Bank, shared expert tips to help you navigate the financial challenges of the holiday season.

https://www.youtube.com/watch?v=8Td-KO6EWV0

Botha said the key to managing the December budget was to spend intelligently rather than freely.

Jooste recommended practical ways to accomplish this.

“Most banks have budget manager app tools on their digital platform. Use these tools to plan your spending categories and set limits to them. Then as you spend, you get reminders of how close you are to your spending limit for a particular category such as groceries.

“The other thing that is potentially useful in a December period to use is your reward points, which you can use, for example,  to purchase fuel, groceries or any festive gifts,” advised Jooste.

December budgeting isn’t just about limiting expenditure; the money needs to stretch beyond the New Year. Moodley highlighted the impending school expenses that follow the December peak. Additionally, buying in bulk can help avoid overspending during the holidays, when product prices typically surge.

Holiday cost hacks

Below are shopping tips to help you navigate the holiday season with ease.

Meal planning: Holiday meals play a significant role in the December budget, particularly for hosts. To alleviate the financial strain of catering for guests, consider a potluck-style arrangement: offer to bring a dish to share when invited, or suggest that guests bring a contribution when hosting.

Budget conversations: Having an open budget conversation with your family is crucial in managing high holiday expectations. Being transparent about your budget allows everyone to understand how much is available to spend. This openness also encourages collaborative brainstorming on fun activities that fit within your budget.

Travel plans: With the majority of people tied up with work and school throughout the year, the holiday season is a popular time to travel. When deciding on travel plans, it's essential to prioritise between your outer and inner circle. Rather than visiting several houses, try to coordinate a gathering at one venue where everyone shares the costs.

Managing debt: Having a financial safety net can provide peace of mind during the holiday season. If you set aside a little money each month, you can build up a “holiday budget” so that you don’t have to resort to debt to finance your holiday costs. If you do need to use debt, make sure you have a sustainable, practical plan to pay it off as soon as possible.

50/30/20 budget: This budget is recommended by financial planners to those who have just started earning an income or are new to budgeting. However, you can apply the same principles to your holiday budget. The idea is that 50% of your salary goes towards your necessary expenses (rent, electricity, groceries, school fees), 30% goes towards discretionary expenses (clothing accounts, eating out) and 20% goes towards your savings and debt repayments.

Gifting: Gifting doesn’t have to mean buying new things in stores. You can be creative with handmade gifts or create something special. Regifting items like books you’ve already read is a thoughtful option. Having many family members can also be stressful when it comes to buying gifts. However, games like Secret Santa can help ease the burden and make gift-giving more enjoyable.

As Jooste pointed out, “The festive season should be more about spending time together than getting the fanciest gift, and I think that’s also a lesson we need to teach our children.” This mindset shift can help reduce financial stress and focus on what truly matters.

Spending habits: To streamline your holiday smart shopping experience, Moodley recommended relying on a traditional pen-and-paper shopping list to curb impulse purchases. “That way you stick to the list, and it’s less likely that you will end up making impulsive purchases,” she said.

Botha suggested opting for online shopping if you’re prone to overspending in physical stores.

“If you know that you’re going to get overwhelmed by the lights, the music, the crowd and the sales signs, just shop online and compare prices, unlike when you’re already in the mall and the one store is on one end and the other stores on the other end. If you’re online, you can actually check whether you are getting a good deal or not,” he said. DM