The year is almost done and feels like it flew by. There are four full weeks left before December and the festive season begins two weeks after that. Many companies in South Africa pay December salaries on the 15th to allow people to make travel arrangements and to do some last-minute holiday shopping. The issue with this is that most people are usually out of funds by the first week or two of January making that month feel like years!
It all comes down to poor planning and we do this year-in and year-out. We know the holidays are coming and we know what is required of us during that time, yet we still manage to overspend. The reality is that it is a happy time for most people and spending money is a part of it. However, it doesn’t have to ruin you financially. In fact, it is quite possible to still have a good time on a budget, if you are willing to give it a shot.
Here is the first tip from us:
Try to use cash, whenever it is safe and possible to do so.
A research paper revealed that cash payments have the same effect on the brain as physical pain. In other words, our brains register parting with money in the same way that it processes physical pain – it’s unpleasant. In this paper, ‘Monopoly Money: The effect of payment coupling and form on spending behaviour’ by Raghubir, P and Srivastava, J, it was found that using a credit card was less ‘painful’ because of the delay between the transaction and the settlement of the bill. Paying with a credit card is also less ‘painful’ because you can aggregate your purchases, making it feel better to spend more.
In a few other studies, it was revealed that consumers were willing to spend more even for the same products, if they were swiping a card instead of paying for it in cash.
The moral of the story? If you are trying to control your spending this festive season or any other season, consider using cash instead of swiping your plastic.