As the holiday season begins, the working class is reminded to spend wisely on items that will guarantee their financial stability in January.
Paul Nixon, Momentum Investments’ head of behavioural finance, gave details of consumers’ shopping trends. He said in an effort to earn the approval of their family, people purchase expensive and meaningless gifts around Christmas.
Nixon advised against taking money out of the two-pot system.
Two-pot system is just as vulnerable
“I agree with the 2-pot system. Because if you look at the unemployment rate in the country … some of your family members might be without jobs. You cannot sit with money on your 2-pot. But you cannot take the money for home renovations. The average tax that people are paying, is around 35%- 36% on the system,” said Nixon.
He added that the working class persuades itself that the two-pot system is a good idea. Because they are vowing to pay for credit cards with it.
“It is a wrong decision. Because you pay tax on that money first before it comes to a person’s account. What are the chances that the credit card will remain paid off? Some end up in a similar situation.”
He said people need to start tracking their spending and get rid of all the bad spending habits.
On the other hand, money trauma coach and author Vangile Makwakwa explained the other aspect of spending. She said most of the workers spend money trying to prove that they have made it. And ultimately earn respect, validation and love.
Have a healthy relationship with money
“When you have money, you get to have a voice in family meetings. Once the money is no longer there, the respect and love diminishes. We love to flaunt and floss,” said the What’s Money Personality author.
She said the working class needs to have a healthy relationship with money.
“When you feel an emotion, it is accompanied by a thought. How one behaves with money when they are scared is different to when they are happy.”
