It’s easy to lose ourselves in our shopping experience, but when it comes to deciding on how you are going to pay for everything, there are five methods that are best avoided altogether.

Taking out a loan

Taking out a loan means you will be paying back the debt until next year.

Also don’t forget that taking out loans can affect your credit rating.

Using a store account

It is very tempting to want to pay for your purchases on your Edgars or Woolworths account because you can get “10%” off if you do, or a free perfume for every R1 000 spent. The only thing that these stores are actually doing is coaxing you into spending more. Do you really have to buy those shoes that will result in you getting a perfume that will probably lie in your cupboard? We don’t think so….

Straight or budget?

Do you understand the risks involved in paying for an item on budget? Even though it might sound like a nice idea to not have to lay out an entire wad of cash in a single shot and rather pay it off, the truth is that by the time you have finished paying off the item, including the interest attached to using a budget period, you will have paid more than the original amount. Rather stick to buying items that you can pay for in one go.

Dipping into your overdraft

According to Investopedia, an overdraft facility is a continuation of your bank account that will allow you to use funds that aren’t actually available. It may sound great that you have a back up plan available to you if you need the money, but is it really necessary to dip into this facility for presents and other year-end treats and then have to deal with the interest and repayments?

Breaking open that savings account

We strongly advise that you do not use your savings for impulsive purchases. The money in these savings and investments accounts are to be used for bigger purchases such as a home, or for one day when you retire and you need the extra income.

As you don’t want to land yourself into financial hot water, it’s important to make sure that you budget well.