The presently flat interest rates give consumers an opportunity to get into better financial shape by structuring personal finances ahead of the festive season and the New Year.
Ester Ochse, Channel Head at FNB Financial Advisory says how people manage finances over this period could impact their financial wellbeing over the next few months, going into the New Year.
“Some people might use this period to tighten financial control, others will pursue investment opportunities but you also have people who will feel that it’s the best time for them to spend,” she says.
“The reality is that there is no wrong or right decision because everyone is influenced by their financial position. Regardless of what anyone does, there are important financial boxes to tick to ensure a better financial future.”
Save for education
Whether you have kids in pre-primary, primary or high school – your education costs are likely to go up over the next 12 months. By how much is the main question, but it is safe to factor some kind of increase in your financial plans.
“Parents could easily get overwhelmed if there are no proper plans to keep up or stay ahead of education costs. Hence the need to plan in advance, starting with upfront costs like registration, stationery, uniform and other essential items,” says Ochse.
Plan your festive season expenses
“Festive season expenses can get out of hand if not kept in check – where possible, start buying some of your family gifts now and stock up at a pace suitable to you. This will help you avoid the impulsive spending habits that are associated with the festive period.
“If plan A doesn’t suit you, work out roughly how much you’ll need over the festive period and separate that budget from the rest of your money – this requires a lot of discipline,” she adds.
Boost your cash reserves now
Every New Year brings its own challenges and opportunities. From a financial point of view, it’s much easier to capitalise on opportunities if you have cash reserves, such as an investment account or a savings account. Cash reserves will be very handy should you need to cover emergencies or unforeseen expenses.
Ochse concludes by saying, “Even though interest rates have been flat over the last few months, consumers are not yet out of the woods because the overall state of the South African economy remains fairly delicate. The cost of living is still relatively high, with more food prices predicted for the remainder of the year.
“This is why it is critical to keep a tight budget in order to be prepared for whatever eventuality. While no single individual can control economic activity, how one reacts to such activity is 100% within their control.”
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