The festive season is a time of joy, celebrations, and spending. But for many South Africans, it can quickly turn into a financial trap, leaving households struggling to make ends meet in January. Experts are urging consumers to take proactive steps to manage their finances this holiday season.
David Molotsi, financial adviser at Momentum Financial Planning, says although the festive season is eagerly anticipated, it often leads to what he calls an “emotional spending trap”. The desire to give, celebrate, and make the most of the year-end can push many beyond their financial limits.
“The result? That emotional high of December quickly turns into the financial low of January debt,” Molotsi explains.
Setting financial guardrails for a guilt-free festive season
To avoid overspending, Molotsi suggests five practical steps:
- Budget first, shop second
The single most effective action you can take is setting a hard, non-negotiable budget for all festive activities: gifts, travel, entertaining, and even extra groceries. Look at your savings and determine a single, realistic number you can spend without dipping into debt. Then, allocate that amount to your various spending categories. Think of this budget as your containment zone. Once it is set, everything outside it is off-limits.
- Implement the one-gift rule
Societal pressure pushes us towards giving multiple gifts to everyone. This is a big source of festive overspending. Shift your focus from volume to meaning. For all but your closest family, commit to a one-gift rule. If you are attending a party, suggest a Secret Santa exchange or a shared experience instead of individual gifts. This allows you to purchase a more thoughtful present while significantly lowering your total spend.
- Schedule financial check-ins
During this emotionally charged spending period, check your bank balance more often, not less. Ignoring your accounts is what allows minor overspending to become major debt. Schedule three non-negotiable dates in your calendar – for example, December 10th, 24th, and 30th – to review your spending against your budget. This proactive step allows you to course-correct immediately. Remember that you can’t fix what you don’t look at.
- Embrace experiences over things
Often, the most cherished memories of the holidays aren’t related to things we bought, but to time spent together. Financial freedom comes from recognising the difference between true value and fleeting retail excitement. Invite your friends around to your home with everybody tasked with bringing something to add to the meal instead of an expensive restaurant dinner. Or suggest a games night or move night at home. These gestures are personal, memorable, and often cost next to nothing.
- Ring-fence your January essentials
Before buying your first gift or booking a single trip, look ahead. January typically brings with it school fees, medical scheme and insurance premium increases, and other non-negotiable annual costs. Transfer the money needed for your January essentials into a separate, dedicated savings account. This is the financial equivalent of placing an oxygen mask on yourself first. What’s left over is your guilt-free festive budget.
“Sticking to a holiday budget isn’t about being stingy; it’s about being secure,” Molotsi notes. “It allows you to enjoy the glow of the holidays without the dark cloud of debt hanging over your fresh start to the new year.”
Understanding the wider financial pressures
René Moonsamy, chairperson of the National Debt Counselling Association, warns that overspending during the festive season is a recurring problem.
“Typically, what we see happening in mid-January and into February is consumers finding themselves in a pinch and borrowing to make ends meet until the next payday. The problem is that many households are already struggling to keep their heads above water, and the repayments on these loans add long-term pressure. One unexpected expense or emergency can then result in serious financial difficulties,” says Moonsamy.
Several factors contribute to this cycle, including peak retail sales from Black Friday through New Year, early December salary payments stretching over six weeks, and the lack of year-end bonuses for many workers. In addition, consumers often do not budget for January expenses, such as school fees, or annual price increases.
Tips from debt counselling experts
The National Debt Counselling Association advises consumers to:
Think ahead
Consider how long a salary paid in mid-December needs to last. Allocate money for normal living expenses for the full period, factoring in January expenses before buying gifts or making holiday plans. Ensure there are sufficient funds in the account to cover debit orders in December and January. “Bounced” debit orders can negatively impact credit scores and attract bank penalty charges. Plan to ensure there is enough cash in your account.
Not spend it all
People who are paid bonuses should think about their financial commitments before deciding on any discretionary spending. Using some of the windfall to repay or reduce debt, save or invest will help provide a financial cushion in the New Year.
Borrow responsibly
Borrow only if it is necessary for essential spending such as transport, back-to-school costs or medical expenses. Do not borrow at expensive interest rates for consumption-related items.
Only borrow from lenders registered with the National Credit Regulator that have a valid NCRCP number. Avoid those that take your Identity Document or bank card as security, which is illegal, refuse to provide a contract, or charge unclear or unregulated fees or vague administrative charges.
When applying, do not overstate your income or understate your expenses in an attempt to qualify for a larger loan. Registered credit providers apply affordability criteria to protect consumers, ensuring they can reasonably afford the repayments and will not be over-indebted if the loan is granted.
Keep up the payments
Keep up with debt repayments over the holiday break. National Debt Counselling Association data shows that, on average, it takes two years for consumers to catch up on missed December payments.
