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Reckless spending can land you in a debt trap – What not to do this Black Friday

by | Nov 13, 2022 | Personal Finance

It’s that time of the year again, the holidays are upon us, and retailers are pulling out their best tricks to try and reign in on all the 13th cheques and Christmas bonuses, most famously through the widely observed Black Friday.

Let’s get one thing out of the way, Black Friday is not the biggest discount shopping day of the year. There are far better discounts retailers host throughout the year. In fact, many shopping outlets often inflate prices just before Black so as to create the illusion that the prices have decreased dramatically on Black Friday. Companies also use a marketing tool called the “loss leader” approach. This involves only lowering the prices on a few items so as to attract buyers to the store, for shoppers to  end up staying at the store and spending even on non-discounted items.

Nonetheless, Black Friday is not all bad for consumers and there are ways that shoppers can access great deals and save on their holiday spend. The important thing is to shop wisely and not get duped into buying things you do not need all in the name of Black Friday. Some wise shopping tips include creating a list of items that you need and scanning through different stores for the best deals on those particular items and nothing else. Secondly, if you’re buying online, be careful of chancers trying to take advantage of the frenzy and scam people into buying bad products. Apply the notion, if it’s too good to be true, it probably is. Finally, and most importantly, if you cannot afford an item, don’t buy it. Do not buy on credit because you will only end up paying much more than the advertised price.

We’ve all had a tough economic year. According to Stats SA’s latest report After two consecutive quarters of positive growth, real gross domestic product (GDP) decreased by 0,7%1 in the second quarter of 2022 (Q2: 2022). It said the devastating floods in KwaZulu-Natal, load shedding and skyrocketing petrol prices contributed to the decline, weakening an already fragile national economy that had just recovered to pre-pandemic levels.

This circumstance has led consumers to relying more on debt to fund their lifestyles as 43% of credit active consumers admitted that they spent the borrowed funds on food, while only 11% said on clothing, and on other household expenses.

In this climate, the CEO of National Debt Advisors, Charnel Collins has cautioned consumers to not allow Black Friday to derail them from practicing healthy money management tactics. She said healthy financial management was even more important to practice during the holidays. Here are some tips she proposed to ensure you stay on track this festive season.

 

Create a budget and stick to it

It is true that consumers are likely spend more than during the December period than the rest of the year, however this is why everyone should have savings in place to cater for this time of the year. If you did not save up, you can still plan for your spending through a budget. Make a list of all the items you need and ensure you do not go over your budget.

 

Avoid debt at all costs.

No matter what, avoid going into debt for the fleeting moments of the holidays. You will only end up regretting it when you’re stuck in a debt spiral for months on end thereafter. The best way to avoid going into debt is to keep track of your spending and buying only what you can afford on cash. If you need a bit extra, rather try and find a side hustle, and there are plenty opportunities for these during the holidays.

 

Think about January

It has been a long and hard working year. All most of us want to do at the end of it all is let our hair down and enjoy the festivities that the season brings. This often means that we have to dig deep into our pockets to take full advantage of the much needed break. While there is nothing wrong with some much deserved spoils over Black Friday and the rest of December, there is nothing worse than waking up in January without a penny to foot your regular household bills. As you go back to work you will yet again need money for transport, food, rent, and if you have children school fees and other back to school items too. The best way to ensure these expenses are taken care of is to pay for them in December prior to spending any money on your holiday plans. Also keep a January savings pot so that you start the year off with nothing to worry about but your exciting new year’s resolutions.

The story behind Black Friday is that, historically, November was a difficult month for sales because people are saving for Christmas. Additionally, some economic sectors missed out on the December bonanza since they were closed during the holiday season; thus, they decided to hold a Black Friday in November and get a share on the Christmas frenzy. In essence, it was an excellent business strategy, and Black Friday shoppers are not to blame for going crazy. The problem only arises when people buy goods on credit, as they end up paying more because of interest rate charges months after they buy those ‘discounted’ items.

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