December is the busiest month for retail throughout the whole year. People are either trying to take advantage of the end of year sales from retailers, or they are spending their money on travel and festivities. This is also the reason why January is regarded as the longest month - people are low on cash due to the unrestrained spending in December.
If you have any hope of avoiding debt and starting 2016 on a good financial foot, these are some money mistakes that we advise you to stay away from.
Not having a Budget
How many friends, colleagues or family members are you giving a gift for Christmas? Do you have a limit on how much to spend on each gift? The worst thing you can do to your savings is to shop on a whim. If you don’t have a budget for your expenses, you may eat into your savings more than is necessary. Gifts are not the only things to plan for. Travelling to spend Christmas with your family? Or hosting a Christmas party in your home? All of these require you to spend money wisely.
Solution? Make a list of everyone you are buying a gift for, as well as other expenses that will come up during the Christmas period. Budget how much you want to spend on each gift, and the preparation in total. This will help you avoid the mistake of dipping too much into your savings, or borrowing money.
Going into Debt
Christmas is a time of giving, and of spending time with loved ones. It is not an excuse to spend endlessly and go into debt. It is also not a wise idea to charge everything to your credit card during this period. If you are unable to meet up with your repayments as scheduled, you may end up paying double for everything you bought, because of interest rates.
Solution? Stick to the savings limit that you have set for yourself. Buy everything with cash or debit card, and try not to go above limit.
Your brother wants some money to buy the latest smartphone that is on sale, and your friend wants to buy a cheap ticket for a holiday trip. If they ask you for a personal loan, how sure are you that they will be able to repay? It is a season of giving, but when it comes to money, we have to be careful that we are not jeopardising our personal finance goals because of other people.
Be careful with your lending during the festivities. Most people are usually caught in the general happiness of December and may fall prey to bad money decisions. You do not want other people’s indiscretions to affect your goals.
This is not to say that you should not lend money to loved ones. Rather, it is a reminder to be conscious of what you do with your money during this period.
Not checking your Credit History
The importance of checking your credit history is still somewhat overlooked by Nigerians. At best, a lot of people only check their credit history when they are required to do so by a lending institution, or when they have been denied a loan. If you don’t keep up with your credit history during the festivities, how do you immediately detect any case of identity theft before you lose your money?
Solution? Shopping online, swiping your cards at the shops, all expose your money to fraudsters. Your details may easily be stolen during this period. To prevent this, we advise that you check your credit report at the beginning, and at the end of December. This will not only help you keep track of your existing loans, it will definitely also alert you on any unfamiliar transactions.
Want to check your credit history right now? Click here
What other mistakes have you learned over the years, and are hoping to avoid this December? Join the conversation with us on Twitter (@CRCCreditBureau) and on Facebook (CRC Credit Bureau Ltd).