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CHRISTMAS is around the corner and your first temptation will undoubtedly be to give yourself and your family thoughtful presents to celebrate. After all, we all deserve some spoiling, particularly when we have worked hard during the year.
This Christmas might be an appropriate one, though, to practice some restraint.
For a few lucky ones it is bonus time and along with it comes the temptation to spend all your hard-earned money. But this is a great opportunity to spend for the future.
Since this is the season of giving, consider giving yourself and your family a little something that won't break the bank.
Scaling down on what you spend on a gift will free up some extra cash that you would otherwise have spent on expensive gifts with a limited "shelf life". You could then use the additional cash for a number of smart investment choices since you should also consider living for the future,
So by scaling down on a more expensive Christmas gift and by taking the money that you would have spent and investing it, you can aim to secure a better future for yourself and your loved ones.
We need to focus on the actual behaviour change to help break old habits and start new ones that will enable us to achieve our financial aspirations.
According to Old Mutual Savings Monitor research one in two South African households are saving less than they were a year ago. This is because of a culture of non-saving, low financial literacy levels, over-indebtedness and prevailing tough economic conditions.
So by changing a habit of spending into investing this festive season, you will be nurturing good money management behaviour.
Old Mutual's study revealed that 31percent of households are saving for their children's education, about 22percent of households are saving to buy a car and 19percent are saving for a deposit to buy a house.
So with this in mind, we suggest the following smart investment Christmas gifts:
lWhy not take out an education policy for your child to give him or her the best opportunity in life? Parents should create wealth by planning, saving and taking control of their children's education. For most of us, it's a question of investing, which means taking a look at different options, including education policies;
lYou could give your child an investment policy to accumulate future savings. This will come in handy when he or she needs a 'jump-start' in life by perhaps wanting to purchase an own car when starting out on their career journey;
lBy saving an additional R250 a month for the next 10 years on an investment return of 8percent with an annual 5percent premium increase at current inflation of approximately 8percent a year, you would have saved about R61000. Imagine the possibilities. A deposit on a house?
So by taking out an investment policy, you can start saving towards that future dream;
lHow about helping an elderly loved one who has not yet saved enough for retirement by taking out a policy to help him or her on the path to a more secure future?
You may not be able to close the gap at retirement, but you may be able to lessen the burden on your family, who may have to take care of that older family member during retirement.
Once you've spoiled yourself, you should consider keeping some money aside to pay your way during the festive season and avoid going into debt.
Why not try to pay cash for as many of your purchases as possible? Using a debit card to make purchases instead of a credit card will ensure that you don't spend money you don't have.
Work with a competent financial adviser - who is compliant to the Financial Advisory and Intermediary Services Act - on structuring an action plan to enable you to invest in your future whilst still living within your means this Christmas.
lThe writer is executive general manager of Personal Financial Advice at Old Mutual.