Don’t let Black Friday be a black mark on your finances
Just because 2020 has been a rough year doesn’t mean it is ok to blow your budget by treating yourself come Black Friday, cautions Rita Cool, certified financial planner at Alexander Forbes.
Five tips to avoid temptation in ‘Black November’
Black Friday, one of the world’s busiest shopping days, falls on 27 November. This year many cash-strapped retailers have extended this into ‘Black November’, giving consumers even more temptation to spend money.
Many people have been retrenched or forced to close down their businesses this year as the impact of Covid-19 wrought havoc on the economy, so people need to watch their spending instead of bargain hunting for prices which might not even be that much of a deal.
1. Don’t be swayed by marketing tricks that lure you into buying
This year retailers have made it even easier to spend money by extending the sale period as well as making most things available online to assist with health precautions.
2. Some marketing tricks use our own behavioural traits to get us to buy
Offering limited items at a sale price or a sale only for a limited period triggers our fear of scarcity. This can make a product seem more desirable and exclusive. By the time you have done your research and decided on a product, even if you are not one of the lucky buyers to get the special price, you are so invested in the idea of buying the product you might decide to buy it at the normal price. Or because the sale period is limited, you decide quickly without taking the time to make sure it is what you want or need.
3. Often a sale sign is enough to make people change their spending
Question what the pre-sale price was and whether the price was actually higher before. Just because it says sale doesn’t mean it is cheaper.
4. Free gifts before or with the purchase make a product tempting
Ask yourself if you really need the free item and if not, if the main item is still worth the price.
5. Aimlessly surfing the web looking for deals is dangerous
If you are looking for a specific item, such as a bed or an electronic appliance, do your research beforehand. In this way, you know what model you want and what the usual price is, so that you don’t get caught up in a wave of panic buying on the day.
If you are in debt
Avoid temptation and stay away from the shops on Black Friday. Don’t read the catalogues and unsubscribe from online retail store emailers, which can lead to impromptu clicking and buying.
Keep the interest rate on the credit in mind, as this would erode a potential discount. If you haven’t saved up for that big-ticket item, and you’re out of work or on a reduced salary, rather wait until your cash flow has improved.
If your debt is under control
Use any extra money you would have spent on Black Friday to set up or top up your emergency fund. We saw the importance of such a fund this year. Add additional money to your home loan, or top up your cash-free savings account before the financial year-end in February. With the interest rate so low on your home loan, any additional money added to the repayment will reduce the term and interest.