By: Nicola Mawson
For many South Africans, even as inflation continues to decline and interest rates have come down for a second month by 0.25 percentage points, the opportunity for a splurge over the traditional festive season is a slim one.
Low savings levels and an extended tough period, making this year-end a welcome break, also means that any bonuses, if received at all, will be spent on playing catch up with regular expenses.
As Kia Brokers managing member Gerald Kahn put it: “South Africans are so far behind on all their payments,” given a challenging time, that any bonus, “is ‘spent’ long before it is paid”.
Warwick Wealth regional wealth specialist, Natalie Wood, told Personal Finance that her experience shows that the festive season is no longer about spending on gifts but rather about just making a holiday happen, mostly with family.
As Wood pointed out: “Very few folks are actually receiving bonuses. The economy is a tough one and any bonuses are no longer used for holidays, etc. but rather to cover pockets of debt or medical bill payments, or to simply just survive. Folk are simply surviving and there is very little money for luxuries.”
Alexforbes financial planner, Buhle Nxumalo advocates using a bonus, if one is fortunate enough to receive one, to pay off debt such as those with higher interest rates like credit cards. “Debt can be quite crippling to your disposable income as it leaves you with very little breathing room to have any extra money for any unforeseen emergencies,” she said.
In fact, consumers should not see lower repayment amounts, thanks to interest rates declining, as additional spending money, said Nxumalo. “Whatever cash that is freed up from your debt instalments should preferably go towards making additional payments to pay off your debt quicker and should not be seen as sundry cash that can now be redirected to frivolous spending,” she said.
Sharon Moller, financial coach at Old Mutual Wealth, told Personal Finance that consumers should also be considering emergency savings and long-term investments in addition to paying down debt.
Wood advised consumers to save a portion of their monthly salary in an “untouchable” savings mechanism for when “life happens, and expenses arise”. Nxumalo said, for those who battle with disciplined savings, most companies offer the option of having an amount deducted from salaries each month, which then becomes a 13th cheque.
Yet, Nxumalo said that, as consumers feel the pinch, most turn to accessing credit to be able to sustain their lifestyle. This, she explained, has led to a debt crisis with 10 million people being three months or more behind in debt repayments or facing legal action because of a failure to keep up with instalments.
Nxumalo added that, even as consumers battle to pay the debt, the appetite for this continues to rise at an “alarming rate", especially during the “silly season”. “After a long year of working hard, the average consumer feels the need to spoil themselves and thus tends to splurge more than they would have at any other time of the year, even if it means living beyond their means,” she said.
In addition, it’s important to bear in mind that Januworry is a six-week month as many salaries will be paid mid-December ahead of the traditional “builders’ holiday” that sees most businesses closing.
Moller said surveys have shown that 40% of individuals rely on credit cards or loans to navigate January expenses. The Old Mutual Savings and Investment Monitor for this year showed that 23% of households reported falling behind on bills during the year, a problem that worsens in January due to overspending in December, she said.
Nxumalo advises consumers to draw up a budget now for January to ensure that necessities as well as back-to-school items are covered. “Whatever funds you have left can then be used to take care of your extra December costs,” she said, noting that people need to distinguish between what they need and what they want.
Moller also advocated automating bill payments to avoid missing deadlines.
“To be honest, most folks get through to mid-January, spending the rest of January focusing on the bare essentials,” Wood said.
Ideas for cost-effective festivities:
- Host a potluck dinner or bring & braai, where everyone brings a dish, or plan a day for group activities like board games or outdoor adventures.
- Try creating personalised or handmade presents, such as baked goods, knitted scarves, or photo albums. This makes your gift meaningful without breaking the bank.
- Use DIY decor made from natural materials (e.g., pinecones, branches, or repurposed paper). You can also participate in free local holiday events, like carolling or community tree lighting.
- Treat yourself to small, low-cost pleasures like a spa day at home, reading a favourite book, or cooking your favourite meal.
- South Africa offers stunning natural landscapes. Spend a day hiking accessible trails.
- Explore holiday-themed local events such as Christmas markets, public carol singing, or festive light displays.
- Host movie nights at home
- Offer experience coupons like babysitting, helping with chores, or organising a picnic. These gifts demonstrate care and thoughtfulness while being cost-effective.
- Implement a “no spend” January challenge through cooking meals at home, and engaging in free activities, like walking tours or playing games.
- Organise a “trade and borrow” system for things like books, movies, or tools to foster resourcefulness.
Source: Sharon Moller, Financial Coach at Old Mutual Wealth
PERSONAL FINANCE