As the festive season excitement sweeps across South Africa, many are tempted to indulge in lavish spending, often forgetting the long-term consequences.
Salem Nyati, a Consumer Financial Education Specialist at Momentum Group, urges South Africans to approach this year-end with caution, advocating for financial prudence amidst the seasonal celebrations.
“This festive season presents a prime opportunity to build a solid foundation for your financial future, rather than squander money on unnecessary expenditures,” she stresses.
Nyati also highlights the significance of financial discipline during these critical weeks.
“With the myriad temptations and family pressures that come with the festive season, it’s vital to stick to a well-thought-out plan to avoid starting the new year under the burden of financial anxiety.”
The new year should not usher in worry, but rather the promise of a healthier financial outlook for households that prepare wisely now.
It is highlighted that managing personal finances can be an overwhelming task, especially with individual family members presenting unique needs and desires.
However, Nyati believes in the possibility of achieving a life free from financial stress. She has shared several practical tips designed to foster financial discipline and pave the way for a flourishing, stress-free 2025.
Adopt a frugal mentality
Frugality is often misunderstood; it is not synonymous with being cheap. Nyati encourages a mindset that prioritises long-term financial goals over short-term extravagance. “Think of yourself as money savvy or savings smart,” she suggests.
“This value-first approach can help you determine what’s essential and what isn’t.” Surprisingly, sometimes a high-quality but expensive item can be a more frugal choice than bargain options that may not last.
Practising strict financial control can also inspire vigilance regarding your financial situation, keeping a close watch on credit records, maintaining accurate financial documents, and ensuring adequate insurance coverage are vital steps towards this. “Spend wisely; all those small expenses accumulate,” Nyati adds.
Create an emergency fund
Despite a cautiously optimistic economic outlook for South Africa, the unpredictability of personal finances necessitates preparation for unforeseen events. As she rightly points out, an emergency fund is crucial for shielding households from potential financial shocks—be they medical emergencies or sudden loss of income.
The ideal emergency fund should cover three to six months' worth of expenses in readily accessible cash.
“Accompany your emergency funds with the right insurance, to safeguard your valuable assets,” she advises.
Nyati also recommends diversifying savings into multiple accounts, resisting the temptation to keep large amounts in transactional accounts to bolster security.
Review your financial goals
Routine evaluations of your financial goals can illuminate areas where adjustments may be necessary. She suggests regularly assessing whether your spending habits align with your aspirations and objectives.
“By regularly checking your debts and savings levels, you can take charge of your financial health,” she explains. Seeking the guidance of a financial adviser can provide a valuable perspective on your financial journey.
“When you adhere to a financial plan and live within your means, you cultivate an environment that allows for growth and future success,” Nyati concludes. “Resisting certain temptations today can lead to greater opportunities tomorrow.”
As 2023 draws to a close, now is the opportune moment for South Africans to reassess their finances, prepare for a sustainable future, and embrace the wealth of possibilities that 2025 may hold.
Saturday Star