Personal investing

Don’t let December derail your long-term plans

As we approach the proverbial finish line after a long year, most of us are looking forward to a well-deserved break. However, as we focus on making memories with our loved ones and living in the moment, it is easy to lose sight of our long-term goals – particularly when it comes to our finances. Phiko Peter and Tinashe Kunaka share some ideas to help you stay on track this festive season.

Last year, South Africans pumped R210 billion into the economy over the festive season. With vaccination rates on the rise and the world gradually reopening, spending is likely to increase this year, giving the local retail, hospitality and tourism sectors, and our economy, a much-needed boost.

With the holiday spirit in the air and our inboxes flooded with Black Friday deals and tempting travel offers, it’s no wonder that many of us are already finding it hard to resist the urge to spend. When you work hard and remain committed to achieving your goals, it is important to reward yourself. That being said, ill-considered financial behaviour, even for just a few weeks over the festive season, can have far-reaching consequences for your pocket down the line. The good news is that planning your spending in advance can allow you to indulge over the festive season without leaving you with a financial hangover.

When it comes to our personal finances, most of us know what the right behaviours are, but knowing them isn’t always enough to control our impulses. Bearing in mind that our actions determine our outcomes, here are five suggested actions to consider taking to remain on track:

1. Plan your festive spending: Create a realistic budget that factors in how much you intend to spend over the festive season and accounts for January’s financial demands.

2. Save before you spend: With the best intentions, many of us promise to save whatever is left after the festive season. This often results in not being able to save at all. To make sure you meet your goals, spend what is left after you have contributed to your investments.

3. Don’t overspend: There is nothing wrong with treating yourself, as long as you don’t spend more than you can afford. Being realistic about your limitations and communicating these limits to your dependants will allow you to indulge without sabotaging your long-term goals.

4. Top up your investments: If you are lucky enough to receive a windfall, like a bonus or savings club payout, this presents you with an opportunity to make additional contributions to long-term investments, such as retirement annuities and tax-free investments, before the end of the current tax year. You can also use this money to pay off debt.

5. Remain vigilant: Criminals know that we often take our eye off the ball over this period and look to take advantage of that. Monitor your accounts, protect your personal information, be aware of online scams and stay away from get-rich-quick schemes.

One of the reasons we splurge over the festive season is our desire for instant gratification. While spending mindfully and making contributions to your investments may deprive you of that rush in the moment, remember that it is deferred spending: You are putting money away so that it can grow and allow you to meet your future needs.

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