When it comes to money, there are three types of people: the risky spender who lives to splurge; the cautious saver who puts money away any chance they get; and the wise user, who shows restraint.
Matthys Potgieter, a debt expert at DebtSafe, has a few savvy tips to help you make smarter decisions with that windfall you may be coming into in December from your year-end bonus or your tax returns.
The risky spender
It's always fun to have a bit of a splurge but, as you know, life is expensive, and South Africans are living in tough economic times. DebtSafe suggests you spend only a little this December (if you can really afford it). Rather spend a few bucks on that holiday you need to pay off instead of being a "throw caution to the wind" spender by shelling out all your bonus money on unnecessary, expensive items.
The cautious saver
If you're in a position to save your entire bonus or have money left from your tax refund amount after debt payments, why not save it? Tuck your entire bonus or part of your tax return into your rainy day/emergency fund. Life happens and you never know how handy that little bit of extra savings may be.
The wise user
Potgieter recommends that a bonus or tax refund can be put to productive use by paying off excessive debt. If this applies to you, here's what you can do:
1. You can make use of the so-called snowball effect by paying off your smallest debt first (like a clothing accounts) or
2. You can use the avalanche method – where you use the money to help pay off the debt with the highest interest rate first, like your credit card.
