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Tis the Season to Be Jolly Prudent!  

As we get deeper into the holiday season, there’s a temptation to dig deeper into our  pockets. The sheer relief of making it to the end of a year can urge us to splurge on treats. Socialising with friends and family can also inspire more non-essential activities — which at the time — seem like reasonable seasonal expenses.

For all the short-term gratification of these live-now-pay-later indulgences, the medium- and long-term financial impact can prove challenging in the early months of next year. Scanning bloated credit card statements and diminished bank account balances can lead to buyer’s remorse.

To minimise the risk of this happening to you, TransUnion has compiled a list of tips and tricks to help you navigate the emotional triggers of seasonal overspending while still enjoying the holiday break.

Build a budget

If you haven’t already, now’s the time to come up with a holiday budget you can afford — and stick to it. Determining what funds you can spend on the people you love — yourself included — is the best place to start. Once you’ve arrived at that general figure, you can map out how much you can afford for the gifts and indulgences you want to share and enjoy.

Do the math

Key to knowing how much you can afford to spend is calculating your debt-to-income ratio. To do so, add up all your monthly payment commitments (e.g., school fees, rent, car repayments, etc.), excluding discretionary expenses like groceries and entertainment, and divide this by your gross monthly income. TransUnion considers 0–20% ‘good’ and anything above 41% ‘at risk.’

Keep tabs

Keep a record of how much you’re spending on entertaining. Dinners with friends, family or co-workers at restaurants, as well as other social activities, can add up quickly, causing your usual, monthly entertainment budget to disappear in record time.

Create alternatives

If you’re running over your budget, consider sharing less expensive home-cooked meals, picnics or a “bring and braai” as memorable and meaningful alternatives. Remember, the people you care about are likely more interested in spending time with you rather than you spending too much money on them.

Pocket the money

Many of us learned the value of cash by earning ‘pocket money.’ Receiving those precious notes was special — and deciding what to spend them on was serious business. Today, swiping a card can make money seem less valuable because there’s no physical parting moment — it’s an abstract debit on a statement you’ll only see next month. We advise paying cash for one shopping trip or entertainment outing to get a more visceral sense of how much you’re spending.

Reap the rewards

Most retailers and banks have some form of loyalty program that earns you points or rewards for regularly shopping or spending with them. Now’s the time to check your balances. Invest a little time over the holidays to see how many points you have with which cards and let them subsidise your gift and experience purchases.

What’s the big deal?

Retailers leverage the holiday season spirit and actively tug at the heartstrings to generate extra sales. If it’s a big-ticket item that’s caught your eye, be sure it fits your budget before taking the plunge. Similarly, with bulk deals disguised as amazing specials, consider whether you’ll ever use the entire quantity — especially if there’s an expiry date – TransUnion!