South African consumers have been urged to resist the temptation to splurge on their bonuses this festive season but save amid the recent interest rate hike.
Analysts said the recent repo rate increase by the South African Reserve Bank might steer many South Africans to use the biggest portion of their 13th cheque or bonus to service their debts, leaving little available to save or spend on festive season activities.
“This year, more than ever, consumers should consider saving a portion of their 13th cheque or bonus,” said Lezanne Human, CEO of FNB Savings, Investments and Fiduciary.
“Although we know that the rate increase will eat into consumers disposable income, this extra end-of-year income can assist to not only settle some of their expensive debt, but also provides consumers with the opportunity to gear towards a financially sound start to 2016 and thus help in breaking the debt cycle.”
By saving a portion of their extra money, consumers can ensure they are prepared for known expenses such as school fees, uniforms, stationery, back-to-work expenses and annual premium increases, the analyst said.
“But also that you have a buffer in place for any emergencies that may arise. As you earn interest on your savings, you are ultimately stretching your bonus much further.”
Author: Tintswalo Baloyi