As Black Friday steadily approaches, South Africans may be ready to part with their hard-earned for great specials and discounts.
But experts are now warning that it’s equally important to exercise caution and self-discipline when managing money to avoid overspending.
According to Ester Ochse, Product Head, FNB Integrated Advice, you can avoid getting into financial trouble on Black Friday by asking yourself five questions before making a purchase:
Do I need it?
Behavioural data from FNB shows that among the top five categories driving spend during Black Friday are: groceries, clothing, and entertainment take the lead.
Non-perishable goods, other essential items and school clothing for next year are especially prudent items to consider.
When it comes to entertainment items like Smart TVs or gaming consoles, ensure that you read the terms and conditions of any purchase to avoid extra charges that are hidden in the costs.
Have I budgeted for it?
You need to ask yourself whether you have budgeted for an item before you add it to your cart and click buy. Not asking yourself that question can result in short-term euphoria, immediate buyer’s remorse and long-term debt servicing.
According to Ochse, a good idea here is to put in a ‘today, tomorrow and next week’ limit to your spending.
“For example, a today limit can be R100, if the item is less than R100 then buy it today. Then the tomorrow limit can be R300, if the item is more than R100, but less than R300, wait until tomorrow and re-assess if it is still a good idea,” Ochse said.
“Then the last one is the next week limit, so for more than R300, wait a week before you seriously consider buying it. Then of course make sure that you have the money in your budget to buy it.”
Is it a really good deal?
This is where it is important to do your research before Black Friday.
If you are looking to make a large purchase, this is not something that should be an impulse buy but rather something that you should do your research on.
Doing the proper research and comparing Black Friday deals can ensure that the discount that you are getting is a proper deal.
Do I take out debt for it?
“Let’s start by saying that the right debt for the right purpose at the right time can be very powerful,” Ochse said.
But how does this relate to Black Friday?
Consumers need to consider the total cost of credit, which is the amount that one borrows, plus interest and fees that are applicable on the purchase.
If it’s for regular groceries and short-term use items, try to pay for it without using debt.
If it is a necessary larger item like a new fridge, then ensure that you do your calculations properly, because once you have paid the item off over a few years, it could cost you more than the discount and you may not even have the item anymore.
Can I rather pay with savings or loyalty reward points?
If you are looking to buy a larger item, you should try to save up to pay for it in cash or buy the item using your loyalty rewards points if you have been saving them for Black Friday.
Ochse said: “For example, if you have R15,000 in a cash investment you potentially getting 6.8% interest per annum. If, however, you take out a loan of R15,000 over a longer period loan the best interest rate that you will get is 17.5%.
“So, you will pay significantly more interest by purchasing the item on credit than what you will earn on your savings.”
Be vigilant this Black Friday
Black Friday is also the time of the year when scammers and fraudsters are on the lookout for possible victims.
Therefore it is crucial that consumers remain vigilant when they are making your purchases.
Here are a few quick tips to remember:
– Be vigilant when shopping either online or instore.
– Ensure that the links that you are clicking are the actual links for company websites and that the URL starts with “https//” or that you see the icon of a padlock.
– Use your virtual card for all purchases as there is an extra layer of protection due to the CVV number changing every hour.
– Get registered for your bank’s inContact notification and ensure you have enabled App Notifications under your phone settings.
– Never let your bank card out of your sight when doing transactions in store and make sure that you always get your own card back after each transaction.
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