Recovering from holiday overspending isn’t just about paying off debt; it’s also about building better financial habits.
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Now that the holiday season is over, many South Africans will be counting the cost of the festive splurges and dealing with a holiday hangover due to an avalanche of credit card bills.
According to Wonga's seventh annual Summer Spending Survey (December 2024), the average expenditure per person during the festive season surged by 20% to R6,832 in 2024, up from R5,707 the previous year.
The survey also revealed that only 26% of South Africans saved throughout the year for festive expenses, a decline from 36% in 2023 and 42% in 2019.
Additionally, 20% of consumers used credit for their holiday expenditures, reflecting a credit dependency among lower-income earners, who are spending beyond their means.
The reliance on borrowed money remains concerning, particularly for lower-income earners with those earning R2,999 or less per month expected to spend around R3,200 which is more than their monthly income.
"The survey reflects a worrying shift towards less financial preparedness and increased reliance on credit. This can lead to a debt spiral that is hard to escape from. The new year is an ideal time to take control and establish a plan to manage this debt effectively," Rynhardt de Lange, Director and head of Legal, Milaw Legal said.
"This level of overspending is unsustainable. Credit is a useful tool when managed responsibly, but it’s not a solution for long-term financial challenges. The key is to focus on repayment strategies and avoid falling into a debt spiral."
With your holiday season's spending now colliding with your financial reality, de Lange shares vital strategies to help you recover financially and prevent a repeat next year.
You can start by reviewing how much you owe across all credit cards and loans. By doing this, you will have an understanding of the full scope of your debt which is the first step to tackling it effectively.
Create a realistic monthly budget that prioritises essential expenses including rent, utilities, and groceries. It is critical that you set aside a portion of your income towards debt repayment.
Focus on paying off your credit cards or loans with the highest interest rates first, as this will save you money in the long run and accelerate your journey to becoming debt-free.
If your debt feels unmanageable, then you should consider debt mediation. A qualified debt management expert can negotiate with creditors to develop a repayment plan that suits your budget.
While it may be tempting to use credit to cover January expenses, try to resist to the temptation.. Instead, look at ways to reduce your costs or generate extra income to cover shortfalls.
"Recovering from holiday overspending isn’t just about paying off debt; it’s also about building better financial habits," de Lange said.
"Saving throughout the year, even in small amounts, can make a significant difference. Start a festive savings fund in January to ease the financial pressure when December rolls around."
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