In a year of widespread economic hardship triggered by the spread of Covid-19, Buy Nothing Day this 27 November, which coincides with Black Friday, offers a timely opportunity to practise overcoming the urge to overspend. It's a vital skill directly linked to good financial health.
“We know the need for ‘retail therapy’ is triggered by stress, and 2020 has certainly been an incredibly stressful year,” says Brett Cameron, Head of Old Mutual Rewards, the loyalty programme that rewards South Africans for making responsible financial choices.
“But just like stress-eating harms our physical wellbeing, stress-spending takes a real toll on our financial health. Not only that, but it doesn’t actually work.”
With the festive season looming, the temptation to blow your budget is likely to be stronger than ever. Make no mistake, says Cameron, resisting the urge to spend during this period is seriously hard work – even for those who are usually very disciplined with money.
How, then, do we successfully resist the impulse to buy? Cameron offers these five tips:
1. Define your ‘why’
If you don’t have a firm grip on the why – in other words, your personal financial goals – you’ll have little to no success with the what (that is, spending less), Cameron says. For this reason, it’s crucial to have goals listing exactly what you most want to achieve, whether it’s paying off your debt, saving for the future, or building an emergency fund.
“Covid-19 has taught us that anything can happen at any time, and in that sense it’s a powerful lesson in the importance of being prepared. Even if you haven’t struggled financially this year, you more than likely know someone who has. While it’s vivid in your mind, let this pandemic serve as motivation to be more disciplined,” Cameron suggests.
2. Set your budget (and stick to it)
Deciding on a budget before you go shopping really is the best way to protect yourself from yourself, advises Cameron. Your budget should be based on an honest assessment of what you can afford and cover both routine expenses (such as groceries) and special items (such as gifts). According to Cameron, a monthly allowance for a reasonable treat will prevent you from feeling deprived, but then it’s very important to stick to the limit you set – and not to use credit or loans to buy your treat.
By downloading 22Seven, Old Mutual’s free budgeting app, and selecting ‘Earn Old Mutual Rewards’, you can link your Old Mutual Rewards account to your 22Seven profile and earn loyalty points for drawing up a budget. You can also use the budget calculator on the Old Mutual Rewards website, which will also earn you more points
3. Set yourself a waiting period
“By creating a delay between seeing something you want – or maybe even need – and buying it, you open a gap for rational thinking about just how necessary the spending is, and whether it’s really worth it,” Cameron explains. Doing this also gives you the opportunity to shop around for more affordable alternatives.
The waiting period could be anything from two weeks to three months, depending on the cost of the item and whether it falls into the category of legitimate need or frivolous wish.
4. Only buy what you can return
It’s a simple safeguard that could save you thousands: only buy what you can return for cash should you wake up the morning after with buyer’s remorse. This rules out the temptation of many flashy sales, which often don’t allow returns and refunds.
5. Avoid temptation
For some, this might mean avoiding shopping malls altogether. For others, it might be unsubscribing from email updates on special offers and sales. The point, says Cameron, is to know yourself and identify your triggers so you can come up with a proper action plan ahead of the time Earn some points by completing the Old Mutual Rewards money personality assessment and find out more about the relationship you have with your wallet.