South Africans urged to avoid ‘silly season pinch’, watch their spending habits

The NCR’s Senior Education and Communication Officer Jimmy Golele says South Africans are not expected to dig too deep into their pockets this year.

The predictions follow a relatively subdued Black Friday, which Golele attributes to the country’s economic climate. 

"The majority of consumers are under serious financial constraints, and this, as a result, probably made consumers think twice about how much they are willing to participate during Black Friday, and how much they are willing to spend and what they are willing to purchase." 

He says although studies have not yet been conducted, they foresee the Black Friday spending pattern being repeated over the festive season.

"Over the festive season, we will see consumers spending reasonably and then thinking twice what they are willing and ready to spend their money.

"People in a particular bracket will spend what may be averaged to, low-income earners would spend what would be an average to low-income earners, middle-income earners would spend what would be an average in terms of what would be their salary levels. Those in the high-income brackets would probably spend what would be an average to that group.

"Also bearing in mind, these different income levels spend on different things. Low-income consumers will probably spend on consumables, whereas high-income spenders may spend a lot of money on travelling. They may take flights, and just the flights alone may be more than what the low-income earner would spend just on consumables over the festive season." 

He’s warned against spending above your income bracket, as this could lead to consumers not meeting their financial commitments to credit providers in January. 

"Around January and February, there would normally be a spike in terms of people who would consider financial relief of some sort, including debt counselling."

Golele raised several concerns when it comes to credit buying during this time of the year - one being overspending. 

"Overspending, which then leads to the need to borrow in January, because come January, people who have overspent during the festive season find themselves having run out of money and yet schools are reopening - kids need uniforms, money for transport, money for school fees and that sometimes leads to consuming having to borrow.

"Not having paid some of debts over the festive season because of the excitement that comes with the festive season, some of them because they have not paid their instalments or their accounts - they find themselves in a position whereby they can't even be considered by formal lending institutions, which then drives them to have to go out and borrow from unregistered credit providers and we all know what happens in that space - people get overcharged, ID documents, bank cards, SASSA cards get taken as a means of security to ensure that the loans are paid back." 

He says consumers need to be responsible and draw up a budget.

One way many South Africans budget for the festive season is through stokvels, and this will see groups heading to the banks to withdraw large sums of cash to split among themselves.

Growth Specialist at FNB Cash Investments’ Cebile Magongo supplied the below tips when drawing at the banks:

• It is advisable to process all payments through safe and digital platforms. This will not only safeguard their money but will also help the scheme save on cash handling fees as digital payments are free.

• Consider doing all digital payments at the last stokvel meeting, ensuring that when members leave the meeting, their funds have been transferred into their personal bank accounts.

• Avoid announcing stokvel meetings or stokvel money withdrawal dates on social media, to friends or family members. This should only be exclusive to members of the stokvel group.

• Avoid carrying and travelling with large sums of money during this peak season.

• If you are not using digital channels, do not withdraw all the funds at the same time. Consider staggering the withdrawals into different days to ensure that your contributions are safe.

• Make cash withdrawals during business hours when it’s safer with security guards present.

• Members should avoid making cash withdrawals of their contributions on high-risk days such as month end.

• Stokvel members should be encouraged to invest or save a portion of their contributions for other important goals.