By Neesa Moodley
How to make wise financial choices these holidays. plus insurance tips for travellers.
Although fuel prices have dropped providing some welcome and much-needed financial relief, the cost-of-living crisis means it is still likely to be a leaner festive season for most families this December.
The Pietermaritzburg Economic Justice & Dignity (PMBEJD) group, which publishes a monthly Household Food Basket index, noted that in November the foods that increased by 5% or more included eggs (18%), chicken livers (5%), tomatoes (20%), apples (10%) and oranges (31%).
The PMBEJD’s Mervyn Abrahams says that, as per the group’s latest calculations, electricity and transport now take up 59.6% of a worker’s wage, and that food is bought after money for transport and electricity has been paid for or set aside. In November, the PMBEJD calculates that workers’ families will have underspent on food by a minimum of 51.3%.
Neil Roets, the CEO of Debt Rescue, says the unfortunate reality is that a growing number of people are resorting to credit facilities to meet their monthly grocery bill requirements.
“We expect this debt will increase over the holiday season as desperate South Africans try to bring some festive cheer to the table – digging themselves even deeper into debt.”
Festive season budget tips
Whether it‘s end-of-year fatigue, a sense of entitlement or just the “silly season”, December seems to be when good money sense goes on holiday along with everything else.
The good news is that a few simple steps can help you avoid a money hangover in January. Farzana Botha, segment manager at Sanlam Risk and Savings, advises:
A budget “cleanse”: Consider implementing a short-term corrective budget to course-correct. Work through your bank statements and look at every line. Be ruthless about eliminating what you don’t need.
Talk about it: There‘s something very cathartic about “coming clean” to family and friends about where you’re at. Chances are they’re feeling the pinch too. Share your savings hacks and budgeting goals to keep one another accountable.
Assess your debt: Credit card debt can wrack up exponentially over December. Assess your debt honestly and plan to pay back what you can as soon as possible. Look for ways to pay more than the minimum monthly instalments and consider the “snowball” strategy of paying off the smallest debt first to free up funds for the next-smallest debt, and so on.
Hack your spending: What spending behaviours are leading to unnecessary expenditure? Go through your statements carefully to categorise your expenditure and look for patterns, such as regular trips to the grocery shop or online sales shopping. Once you see these habits, you can start to change them.
Maximise your rewards prohave rewards programmes with your bank or insurer that offer vouchers and discounts at retailers. Make sure you are aware of these benefits and take advantage of them.
Plan for the unexpected when you travel
Peter Olyott, chief executive of Indwe Risk Services, provided the following key tips around travel insurance:
- Take a moment to evaluate the unique risks associated with your chosen destination. Ensuring the right cover for your destination is paramount. It is also advisable to plan for potential delays or missing connecting flights.
- Many banks and travel agencies extend complimentary travel insurance when you buy air tickets. Although this provides a foundation of protection, you should still speak to your insurer or broker to make an informed decision.
- Every travel insurance policy presents specific benefits and exclusions. When travelling abroad, visa requirements can impact policy limitations, and certain regions may be excluded from coverage. Take the time to review your policy to understand its terms and conditions.
- Secure your chosen policy as soon as your holiday or business trip is booked and paid. This ensures access to cancellation coverage that can extend for up to six months prior to departure.
- Travel insurance is not an area where skimping is advisable. While basic coverage includes medical, accidental death and disability protection, it often has limitations. Opt for comprehensive coverage, which includes safeguards for unexpected trip cancellations, death and disability, personal liability, luggage and more.
Olyott says it is vital to disclose any pre-existing medical conditions to your travel adviser. The failure to do so can lead to losses and added expenses if your journey needs to be cancelled or cut short because of these conditions. Verify whether your travel insurance policy covers these pre-existing conditions.
“Although most risks are mitigated when travelling domestically, tailored insurance coverage designed to meet your specific needs when you travel internationally can spare you from unnecessary expenses,” he says.
