A Christmas bonus is often the first perk to go in a struggling economy but there are ways to squeeze more out of your salary to lessen the blow.
Hedley Lamarque, CFP®, financial planner for BDO Wealth Advisers in Durban, offers some useful tips on how to save a little throughout the year so that you have some extra cash over the festive season.
“A decline in exports and manufacturing output, the credit downgrade and continuing political turbulence, amongst other factors, has placed significant pressure on the economy this year and South Africa slipped into a recession earlier in the year,” Lamarque said. “Organisations that are having a difficult financial year may be forced to rethink paying their staff annual bonuses.”
“The onus is on individuals who have become accustomed to receiving a 13th cheque to plan for the possibility that this might not happen and start taking steps to maximise the income they know they can count on – their monthly salary,” Lamarque said.
A change of mindset is the first requirement, according to Lamarque. “Plan your affairs on the basis that you will not get a bonus. Don’t spend it before you get it.”
When it comes to spending, his advice is to always work on the golden rule – “Do I NEED it or do I just WANT it?”, and only buy something if you really need it.
“Remember the joy of an impulsive purchase wears off quickly and you are then left with the cost of it.” Another way of getting more bang for your buck, is to use all loyalty programmes that you are able to access, as long as the fee does not outweigh the benefit.
“A good example is Discovery Vitality, where if you have a Discovery credit card, you can get discounted gym membership and up to 50% off local airfares and accommodation, and up to 35% off international flights through Emirates, British Airways and Qantas, if you are on the highest vitality status. By using the Discovery credit card you can also earn miles. Other providers such as Momentum and Sanlam have similar programmes”
It is always also a good idea to shop around for bank fees, says Lamarque.
“If you don’t need a private banker, you can save a lot of money by making use of banks such as Capitec, or even the larger banks if you accept their basic packages. Alternatively, choose banks that have good loyalty programmes, such as FNB with their eBucks rewards and Standard bank with Ucount.” Obviously the rule here is to ensure that the benefit you receive exceeds the fees you pay.
“Another good money-saving tip is to request your insurer for a review of your current premiums, especially if you have not claimed for a number of years. In most cases they will reduce your premiums and, if they don’t, then consider getting quotes from other insurers to see if you can get better rates,” Lamarque said.
Online shopping, using sites like Takealot, can also generate savings as they normally have very competitive pricing on most items and free delivery. Subscribing to their daily deals means that they mail you their specials every day, which offer very good discounts on certain products.
“Of course only buy the cheaper items if you need them,” Lamarque warned.
Also be on the look out at most retailers, as they often have birthday sales, opening sales, three for two deals etc. By being aware of the pricing on goods that you buy often, you can make good savings on these items when specials come around.
A good rule of thumb when purchasing an expensive item or service is to always get at least three quotes, as the price differences on similar items or service is often quite astonishing.
“If you are prudent throughout the year, then you should have a little extra cash to make the festive season special for you and your loved ones,” Lamarque said.
“By all means, if you do then get a Christmas bonus, you have the luxury of deciding how and when to spend the unexpected windfall, and perhaps reward yourself with a special treat, such as a holiday.”
Lamarque’s final recommendation is to consult a financial advisor when in doubt. Having an independent person be the sound board to your money decisions can keep you on track and be your conscience in spending on wants.
“This gives you access to a wealth of specialised knowledge and experience from an expert in his or her field who is skilled at generating wealth,” he concluded.
Those wanting more information may email Lamarque at email@example.com.
Read more BDO Insights