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Johannesburg - Feel it, it is dear. Catching the 2010 FIFA World Cup vibe can be an expensive exercise.
The cost of soccer gear, vuvuzelas, alcohol, party food, entertainment and going out - combined with a potential loss of income for many as the traditional economy grinds to a halt - may result in an almight financial hangover for households.
Anecdotally, it seems South Africans are splurging on apparel and World Cup tickets as well as on entertainment, says Derek Engelbrecht, head of Ernst & Young's retail and consumer products sector.
This artificial, short-term spending spike will probably have a "December effect" (an expenditure boom followed by two lean months). July and August should be tough, according to Engelbrecht.
While workers in the hospitality and entertainment industries may benefit during the World Cup, employees in other sectors - particularly those paid on a commission basis - may be hit hard.
In addition, for some South Africans the World Cup was less of a financial windfall than expected, says Herculaas van Heerden, spokesperson for the financial comparison portal Justmoney.co.za.
Many households which invested additional capital in upgrading their homes into guest houses now not only have to do without the additional income they had bargained for, but also need to service excessive debt levels, he says.
Also looming are increases in electricity, water and rates due to be implemented in July. This will heap more pressure on already stressed household finances.
Currently more than 45% of South Africans who use credit are struggling to repay debt, according to the National Credit Regulator. About 10 million accounts are more than three months in arrears.
"Still - I think it would be unrealistic to adopt a no-spend approach to the World Cup ," says Alan Manshon of the Cape-based debt counselling group The Money Clinic.
"It's part of the 'gees' to socialise and spend during the World Cup. As South Africans, we could do with the distraction the tournament brings."
How do avoid a financial own goal during the Cup:
Draw up a budget
Work out how much you can spend realistically on enjoying the World Cup. Once you have a figure in mind, you won't have to feel worried or guilty each time you open your wallet, says Manshon.
Cut down on non-essential spending like items you can do without and decide where you can make sacrifices so that you can afford Cup-related spending.
Parents should explain to children why they need to cut back on spending and paint a picture for them about what the end result will be. Make sure it's a positive vision, says Manshon.
"If you tell a child they can't have something because you can't afford it, it creates the impression of being poor. Rather explain to your child that buying what they are demanding doesn't fit into your shared vision."
Practise creative cost-cutting
Find ways of maximising the fun while keeping the cost to a minimum.
"Instead of paying for the entire cost of a gathering, club together. After all, what's more South African than a bring-and-braai?" asks Manshon.
Cut down on fast and prepared food by making meals yourself.
"Instead of ordering 10 pizzas, get raw dough from your local supermarket or bakery, buy various toppings and make the pizzas yourself. Get your guests to make their own pizza," recommends Manshon.
Don't take on more debt
Whatever you do, don't finance World Cup spending with money you don't have. This will worsen a debt spiral that can ruin your life.
Avoid short-termism
Before you splurge on an expensive item, consider the real cost to your family's long-term financial health.
Mark Cunningham, head of financial planning at Imara Asset Management, says his group advises clients from middle-income groups and those with relatively high net worth and knows that many families have reviewed their lifestyles and started to save because of the dramatic wake-up call they received during the financial crisis.
"In World Cup year and every other year, we advise clients to keep their eyes on long-term goals."
Cunningham looked at the real cost of an item of discretionary spending related to the World Cup - a R10 000 plasma TV.
If you pay it off over 12 months at an interest rate of 17%, you will have to pay R900 a month and the total cost will be R10 790. Paid off over four years, the total cost will rise to R13 657.
By comparison, R900 invested for 12 months, assuming 10% growth, would grow to R11 300 at the end of the first year.
Left to grow, without adding any contributions, the investment would be worth R18 592 after five years, R30 590 after 10 years, and R82 809 after 20 years.
"The scoreboard’s clear enough," says Cunningham. "Splurge and buy that fancy TV over four years and you'll be nearly R14 000 out of pocket. Save the R900 each month for a year, and at the end of five years you will have R19 000 to play with."
Don't ignore problems
Getting carried away by the World Cup party atmosphere and all the football drama is an easy way to distract yourself from unpaid bills.
If you are not able to meet payments, you should initiate contact with your credit provider and try to come to some arrangement.
If you are successful, you should place stop payments on your debit orders and pay the lesser agreed upon amount manually. By stopping the debit orders, you can prevent unnecessary bank charges which can be anything from R35 to R120 per unpaid debit order, advises Manshon.
"If your situation has reached the point where your creditors are phoning you for payment, are unwilling to come to an arrangement or you have received letters of demand, you should see a debt counsellor as a matter of urgency."
- Fin24.com
The cost of soccer gear, vuvuzelas, alcohol, party food, entertainment and going out - combined with a potential loss of income for many as the traditional economy grinds to a halt - may result in an almight financial hangover for households.
Anecdotally, it seems South Africans are splurging on apparel and World Cup tickets as well as on entertainment, says Derek Engelbrecht, head of Ernst & Young's retail and consumer products sector.
This artificial, short-term spending spike will probably have a "December effect" (an expenditure boom followed by two lean months). July and August should be tough, according to Engelbrecht.
While workers in the hospitality and entertainment industries may benefit during the World Cup, employees in other sectors - particularly those paid on a commission basis - may be hit hard.
In addition, for some South Africans the World Cup was less of a financial windfall than expected, says Herculaas van Heerden, spokesperson for the financial comparison portal Justmoney.co.za.
Many households which invested additional capital in upgrading their homes into guest houses now not only have to do without the additional income they had bargained for, but also need to service excessive debt levels, he says.
Also looming are increases in electricity, water and rates due to be implemented in July. This will heap more pressure on already stressed household finances.
Currently more than 45% of South Africans who use credit are struggling to repay debt, according to the National Credit Regulator. About 10 million accounts are more than three months in arrears.
"Still - I think it would be unrealistic to adopt a no-spend approach to the World Cup ," says Alan Manshon of the Cape-based debt counselling group The Money Clinic.
"It's part of the 'gees' to socialise and spend during the World Cup. As South Africans, we could do with the distraction the tournament brings."
How do avoid a financial own goal during the Cup:
Draw up a budget
Work out how much you can spend realistically on enjoying the World Cup. Once you have a figure in mind, you won't have to feel worried or guilty each time you open your wallet, says Manshon.
Cut down on non-essential spending like items you can do without and decide where you can make sacrifices so that you can afford Cup-related spending.
Parents should explain to children why they need to cut back on spending and paint a picture for them about what the end result will be. Make sure it's a positive vision, says Manshon.
"If you tell a child they can't have something because you can't afford it, it creates the impression of being poor. Rather explain to your child that buying what they are demanding doesn't fit into your shared vision."
Practise creative cost-cutting
Find ways of maximising the fun while keeping the cost to a minimum.
"Instead of paying for the entire cost of a gathering, club together. After all, what's more South African than a bring-and-braai?" asks Manshon.
Cut down on fast and prepared food by making meals yourself.
"Instead of ordering 10 pizzas, get raw dough from your local supermarket or bakery, buy various toppings and make the pizzas yourself. Get your guests to make their own pizza," recommends Manshon.
Don't take on more debt
Whatever you do, don't finance World Cup spending with money you don't have. This will worsen a debt spiral that can ruin your life.
Avoid short-termism
Before you splurge on an expensive item, consider the real cost to your family's long-term financial health.
Mark Cunningham, head of financial planning at Imara Asset Management, says his group advises clients from middle-income groups and those with relatively high net worth and knows that many families have reviewed their lifestyles and started to save because of the dramatic wake-up call they received during the financial crisis.
"In World Cup year and every other year, we advise clients to keep their eyes on long-term goals."
Cunningham looked at the real cost of an item of discretionary spending related to the World Cup - a R10 000 plasma TV.
If you pay it off over 12 months at an interest rate of 17%, you will have to pay R900 a month and the total cost will be R10 790. Paid off over four years, the total cost will rise to R13 657.
By comparison, R900 invested for 12 months, assuming 10% growth, would grow to R11 300 at the end of the first year.
Left to grow, without adding any contributions, the investment would be worth R18 592 after five years, R30 590 after 10 years, and R82 809 after 20 years.
"The scoreboard’s clear enough," says Cunningham. "Splurge and buy that fancy TV over four years and you'll be nearly R14 000 out of pocket. Save the R900 each month for a year, and at the end of five years you will have R19 000 to play with."
Don't ignore problems
Getting carried away by the World Cup party atmosphere and all the football drama is an easy way to distract yourself from unpaid bills.
If you are not able to meet payments, you should initiate contact with your credit provider and try to come to some arrangement.
If you are successful, you should place stop payments on your debit orders and pay the lesser agreed upon amount manually. By stopping the debit orders, you can prevent unnecessary bank charges which can be anything from R35 to R120 per unpaid debit order, advises Manshon.
"If your situation has reached the point where your creditors are phoning you for payment, are unwilling to come to an arrangement or you have received letters of demand, you should see a debt counsellor as a matter of urgency."
- Fin24.com
