How to not fall into the Black Friday trap
Black Friday is here, and many South African consumers are participating in the annual shopping frenzy, filled with grand promises, massive discounts, and the temptation to indulge in some serious retail therapy.
However, Jessica Pillay, Financial Adviser at Momentum Financial Planning, has warned that it is equally important to exercise financial caution during this time.
In South Africa, this year’s Black Friday spending is projected to inject R88 billion into the economy, with the retail, wholesale, and fuel sectors leading the charge.
Yet, alongside these figures comes the anticipation of a surge in cyber scams.
“This is a reminder to us all that financial literacy is the most powerful tool in our arsenal against reckless spending and rampant fraud,” said Pillay.
“South Africa has a poor savings culture, which means we have a poor spending culture… something that can only be fixed through awareness and understanding,” she added.
To get the best out of Black Friday without falling into debt, Pillay says that it is vital to understand spending habits and follow a few simple principles:
Get advice before reaching into your pocket
When it comes to spending on Black Friday, Pillay said that it is easy to get swept up in the allure of discounted prices.
She thus believes that savvy shoppers know that having a plan and seeking guidance on major purchases can prevent unnecessary financial strain.
“Yes, so many deals look attractive, but we must all consider consulting a financial adviser or using budgeting tools to keep spending in check,” said Pillay.
Plan
Pillay warned that impulse buying is one of Black Friday’s most dangerous pitfalls.
Research reveals that many shoppers end up with items they never intended to buy, usually after being lured in by “unbeatable” deals that seem too good to pass up.
“This year, with a cost-of-living crisis at our heels, spending can easily spiral out of control,” warned Pillay.
“It doesn’t matter how many lines of credit and payment options you explore. A solid plan and a commitment to staying true to that plan will be the difference between financial health and debt,” she added.
To kick off a smart financial strategy for Black Friday, Pillay recommends beginning with a list of essential items, especially any major purchases you have already planned for in your budget.
It is important to research prices in advance, so you can set realistic spending limits and avoid overspending.
Furthermore, Pillay advises using budgeting apps while shopping to monitor your expenses in real time as this will not only help you stay within your budget but also make it easier to assess your spending once the Black Friday rush is over.
If it’s too good to be true, it probably is
With retailers and scammers vying for your attention, shoppers must be cautious.
This year, South Africa faces an increased risk of online scams, with cybercriminals employing ever more sophisticated tactics.
“Scammers know that Black Friday shoppers are often rushed and distracted, making it the perfect time to prey on their desire for a good deal,” said Pillay.
She suggests sticking with trusted retailers and secure websites to avoid clicking on suspicious links in emails or texts.
“If a discount seems outrageous, take a moment to verify its legitimacy, because you likely know deep down it is too good to be true.”
Black Friday 2024: Record-breaking spending but higher risks
A study by the Bureau of Market Research reveals that while some consumers feel financially secure, many are still grappling with inflation and stagnant wages.
Pillay said that this highlights the need to stay grounded during this time and recognise the importance of responsible spending.
This was echoed by Steven Amey, Head of Intermediated Distribution at Ashburton.
“Most of us are emotional beings, so we convince ourselves that we deserve to be spoilt. We crave fulfilment and we use our logic to justify these cravings,” said Amey.
“However, if we can pull ourselves out of that temptation for a second and look at what we truly owe ourselves, what we can really afford to spend and what we can truly achieve with our hard-earned money, then saving and investing becomes appealing.”
Amey advises considering the following before splurging on Black Friday:
- Are Black Friday deals really the best? A “Which?” report found 98% of UK Black Friday 2021 products were either the same price or cheaper at other times.
- Specials will always be available, so resist the urge for instant gratification, especially with peer pressure.
- Would it be smarter to save and buy without incurring debt? Avoid regret and buyer’s remorse by not adding financial strain.
- Think long-term: Will your 2024 purchase bring lasting value, or could investing that money improve your financial future?
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