Five tips for money savvy investors this festive season

The festive season is finally here! After a long and at times trying year with frequent power cuts and the cost of living on the rise, South Africans are looking forward to letting their hair down these holidays. However, we all know that the year end break often comes with unexpected expenses, so here are some tips to help you protect your finances this season.

Tip 1: Put money aside now for your January expenses

Many people get paid early in December, but you know you still have debit orders for December and January that you need to pay. So don't wait until after your holiday is over to see if you'll have enough for the New Year!

Start by listing all the usual expenses you'll have in December and January. This can include your home or car repayments, utilities, school fees, insurance, regular savings and so on. Set aside this money for essentials and don't use it for anything except what it's meant for. This way, you can enjoy your time off in peace, knowing you won't run into debt in January.

Tip 2: Plan your holiday budget

After Tip 1, you'll see how much money you have left for holiday spending. Remember that over the festive season, everything from essential food items to holiday accommodation is more expensive. So don't underestimate a holiday budget! Once you've set a budget, base your plans on it. Then keep track of your spending by using a notebook, an app or an excel spreadsheet.

Tip 3: Find clever ways to save

A little thought, flexibility and creativity can save you hundreds of rands over the holidays. Brainstorm creative and affordable alternatives to reach the same end goal, such as spending quality time with your family and friends, without spending too much.

For example, instead of booking a long expensive holiday, you could schedule shorter visits and sleepovers with different friends and family members. You can save when you buy consumables in bulk, and spread out their use over a month. You could make DIY gifts or practice Secret Santa gifting, so you can just buy one gift in a group instead for one for everyone. Consider inexpensive activities like outdoor hikes, walks and picnics, and perhaps host a house party or bring 'n braai instead of going out to a restaurant.

Tip 4: Get savvy when giving gifts

Christmas is a wonderful opportunity to be generous to your loved ones. To be wise about how much you spend on gifts:

1. Decide in advance what your budget will be for each recipient
2. Withdraw the amount in cash
3. Take only that amount when you go gift shopping.

By leaving your credit card at home, you'll limit the temptation to spend more than you planned to.

It can also be helpful to manage expectations by starting a tradition in your family or friend group of setting a maximum limit to spend on gifts. This can help make gift giving affordable for everyone, and may even encourage you to be more considered and creative as you abide by the limits.

Before you buy toys, clothes or accessories for a loved one, consider the longevity and value of such gifts. Will they still be using it in a year's time - or in five? A savings or investment account in their name is a valuable gift that can give them more every year, for years on end.

Tip 5: Be smart with a bonus

If you earn any extra money from a bonus or a thirteenth check, don't immediately plan how you'll spend it. It's important to pay 'future you' first, so it may be a good idea to contribute a little extra to your investments during this period. Take some time to consider where you can best allocate the extra funds - either to save you money, like paying off debt faster, or earn you money, like investing it in a retirement annuity or tax free investment plan.

Remember, two key practices for financial independence are saving and investing. Saving involves being mindful about how you spend, and managing your money well. Investing refers to putting money into financial schemes, shares, property or ventures to earn a profit, and staying invested long enough for your money to compound and your wealth to grow. Do both consistently, and you'll help give yourself a wonderful gift this festive season - the gift of financial freedom.

This article is not financial advice. Please consult with a financial adviser for financial advice.