After more than a year of gloomy local economic and market outlooks, most of the bad news finally seems to be retreating.
For the first time in more than two and a half years, consumer inflation is once again within the South African Reserve Bank’s (SARB’s) 3%-6% target band. Most importantly, we were recently informed that the recession is officially over. As a result, many of you are probably anticipating a Christmas bonus – regardless of how small it may be.
However, we shouldn’t allow ourselves to get too carried away as along with these good news stories, there are a few factors that could negatively affect your pockets. This includes the recent petrol price increase and the fact that there are mixed feelings about whether interest rates will be hiked at the SARB’s next Monetary Policy Committee meeting.
So in light of this, what should you do with your Christmas bonus, if you are one of the lucky few to receive onee
Investing and settling debts
Being conservative is always a good idea. This could entail injecting some of your bonus into your bond, savings account or pay it towards your debt. If you choose to settle your debts, remember to tackle those with the highest interest rates such as credit cards or retail accounts. Using any spare cash you have available to settle your debts is always the best option as the peace of your mind you’ll gain is a huge reward in itself.
Gifts
It is so easy to get caught up in the spirit of giving. However, you don’t need to splurge on expensive gifts to get into swing of things. Can you remember what gifts you got last Christmass Most of us can’t. Bear in mind that the value of the gift does not determine the value of the relationship with the person you are giving it to. The experiences we have tend to be remembered much longer. Often, it is much more meaningful to give others our time or an experience such as cooking them a special meal or making something unique for them. If you have a hobby like photography for example, you could always take family portraits and frame these as gifts. If you have children in your family, you can always get them an annual membership to the aquarium or the museum. A trip to the zoo is another fun way to spend the day. This will not only save you a lot of money, but will most likely also make the gift more memorable for the recipient.
Christmas is also an opportune time to create awareness about saving among children. As a gift, you could open a savings account for them and allow them to accompany you to the bank throughout the year to make the deposits into their own accounts.
Another way to save money on gifts is to make use of any loyalty/incentive programmes you may be registered for. You could make use of discounts on magazine subscriptions and this is a perfect gift as it keeps on giving. Some credit cards either gives you cash back into your account or reward you with shopping vouchers. Cash these in and voila, there’s another gift.
Take advantage of sales to pick up gifts at discounted prices, also look out for ‘buy one, get one free’ promotions. You can generally take advantage of this throughout the year.
Why not get one gift for the whole family rather than getting individual gifts, which could end up being quite pricey. Consider buying a Wii, a new TV or some board games as these can be enjoyed together for endless hours of fun.
Holidays
Instead of spending your bonus on an exotic holiday that will probably leave you broke, how about being a tourist in your own country Plan day trips for the entire family, pack a picnic basket and spend some time in a garden or park. There are a number of hiking trails that can be explored while enjoying the outdoors.
Generally, people get paid early in December to facilitate the Christmas shopping so by the time January comes along it’s been a tough, long month with lots of bills to pay. It’s back to school, which means school fees need to be paid, supplies and uniforms need to be purchased and if you have older kids then universities resume in February.
Donating
If you’d prefer to donate to charity, you should consider giving in kind as opposed to cash donations. This is always a feel-good experience as you give of your time or expertise to contribute in a meaningful way.
Over the festive season, not only do we indulge in over-eating but we tend to overspend and then suffer from financial indigestion. While it is understandable that many of us would like to spoil ourselves and our loved ones after a challenging year, there remains uncertainty with regards to the economic situation and saving some of your bonus for a rainy day is wise decision. Observe delayed gratification and put some money away to spoil yourself later in the year like having a Christmas in July.
Whatever you decide to do, be wise and conservative with your spending and have a safe and enjoyable festive season and a happy New Year.
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