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South Africans Advised Not To Go Overboard On Black Friday Spending Spree

With the usual frenzy expected on Black Friday later in the month, when shops offer discounts and South Africans go on a spending spree, the experts are cautioning against getting into debt because of the downturn in the economy.

On the one hand, the adverts for Black Friday have begun, the Christmas lights have been set up in Cape Town’s Adderley Street just waiting for the switching on ceremony, the festive season is almost upon us and brings with it the temptation to splurge on big ticket items so that we can spoil our loved ones.

However, Herman Lombard, founder and executive director of financial services provider African Unity, said: “While it feels great to treat ourselves and our loved ones to expensive gifts and holidays, the reality is that we live in tough economic times and overspending during December causes anxiety during January and may mean that you begin the new year with debt that you didn’t intend to.”

On the other hand, the economic outlook currently looks extremely bleak as business confidence appears to remain at a plateau and policymakers have little wiggle room to set the economy on course.

The South African Chamber of Commerce and Industry said: “Apart from the finance minister recently painting a sobering picture about the economy, which is expected to grow by only half-a-percent in 2019, the fiscal situation appears to be hard to contain within sustainable economic parameters.”

In a statement last week, the chamber said: “Of special concern is the expenditure side with certain items like debt levels, debt servicing and recurrent expenditure items that appear not to be containable.”

Cautioning against buying luxury goods on credit or store cards as interest rates are high and the accumulation of more debt will increase your monthly expenses in the future, Lombard said: “While credit cards can be useful for a necessary purchase, with interest rates as high as 27.75%, it is much better to save up over time for that big-ticket luxury item.

“That way, the impulse to buy may disappear and you may even find that you can do without that purchase. If you’re lucky enough to receive a bonus, try to save a portion of it before spending it. That way, you will have a head start to the new year and the funds to cover back-to-school expenses or to buy something out of budget you need,” said Lombard.

Foreign exchange trader Jeff Cammack said: “Shoppers should aim to spend little, and retirees should keep capital in less risky non-rand assets. Gold, foreign exchange and bonds are all good ideas. Real estate also has a good chance of propping up its value.”

Gary Kayle, founder of the Money School, warned: “If you are going on a wild spending spree, stop and consider whether you want a good 2020. Consider using any windfalls, bonus or 13th cheque, to reduce debt you’ll have more money in your pocket for the coming year. It’s the biggest present you can give yourself.”

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Written by How South Africa

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