Financial mistakes to avoid this festive season
The festive season is synonymous with spending big. Be it entertainment, shopping, travelling, food, gifts – tis the season marked by spending. So, it’s not surprising that many people find themselves in a financial fix when January kicks in – all because their festive season spending got little out of hand.
Are you guilty of over-spending or taking on more loans than you can afford, especially at this time of the year? Turn a new leaf and do things differently! Be wary of these common financial mistakes so that you can start the New Year in a good financial health.
- Failing to budget and stick to it
The single biggest reason our finances often spiral out of control in December is because there’s no budgeting to inform your spending. Whether you’re spending money on yourself or on your family members, it is important that you create a budget so that you can keep a grip on your finances.
Regardless of the size of your budget, make sure your budget is manageable. If you find yourself using up your holiday funds too quickly, it’s best to reassess and determine whether you should and can make updates to your budget.
- Not having emergency savings
Emergencies can happen at any time. Your car breaks down, your geyser leaks, you need urgent medical care – can you afford the costs that come with these types of emergencies? This is where an emergency fund will cushion the impact and save your finances from disaster. Allocating money towards your emergency fund savings will help to make sure that you’re well prepared for financial setbacks.
Would you like to know more about emergency funds? Read about it here.
- Not having a plan
One of the best ways to avoid overspending, and impulse purchases, is to make a list. This works, whether you’re doing your weekly grocery shopping or buying holiday gifts. Sit down and think about what you need for the holiday season in terms of food, entertainment, gift-buying, traveling, etc. This will give an idea of what you plan to spend, as well as help you to avoid buying things you don’t need.
- Not being Cyber Savvy
Criminals are always looking for opportunities, especially at this time of year when they know that people are winding down and spending their bonuses. Cyber criminals use clever scams to commit internet fraud by tricking their victims into disclosing their cellphone or online banking details.
Unsuspecting customers honestly believe that they are speaking to a credible source and, as a result, end up disclosing sensitive information that cyber criminals then use to defraud them. So how do you stay protected? By being cautious about where you shop, where you complete online loan applications and who you give information to. Always keep an eye out for suspicious activity in your bank account, and check your credit report regularly.
- Missing Payments
Do your monthly personal loan payments sometimes sneak up on you? Missing payments or making them even a few days late can have disastrous financial consequences, especially on your credit score. Set up automatic payments or reminders so that you don’t have to worry about missing payments. In this way, you can protect your bank account, your credit score, and your financial future. This will also help to make sure that you get the best personal interest rates when applying for loans in future.
- Getting into debt unnecessarily
Do you tend to make the mistake of relying on a loan or a credit card to get you through the festive season? The kids would love new Christmas clothes. They would love to have delicious food and lots of treats throughout this holiday season, so we understand why so many turn to credit to give their family members a memorable holiday season.
Before you fill out a loan application, a credit card application or store card application, think about whether you will be able to make the minimum payments at the end of December and every other month after that. Consider the personal loan interest rates. Remember: the higher your credit balance, the longer it will take for you to pay it off and the more interest you will inevitably pay.
This season can be a tough one for budgets and your overall financial health. But with a little bit of planning, you can avoid any financial traps and greet the New Year financially strong.