Tips to Stay on Budget this Black Friday

Black Friday is coming and it is the biggest shopping day in South Africa, so whilst retailers are getting ready to reveal their discounts, financial service groups are urging consumers to shop with caution. 

As consumers, we are already carrying an immense amount of debt and even though Black Friday will give us a chance to get those items we want at discounted prices, we need to be smart about it so we don’t end up in further financial trouble. 

According to Bayport, a loan and insurance group, shoppers are seduced by the number of deals and specials that are available on the day, but with budgets already being tight, consumers run the risk of getting into more debt. So, the rule is easy enough…don’t spend what you haven’t got. 

So, here are tips that can help you to not blow your budget this Black Friday.

Have a Game Plan

Retailers always have a plan ahead of Black Friday and so should you. Black Friday is now a yearly event in South Africa and ideally, you should start planning for the following year once the current year is done. 

When you are planning for Black Friday, you should have saved up some money so that you don’t need to use your monthly cash flow and budget. Also, have a list ready of the things that you want to get your hands on instead of just buying items for the sake of buying them because they are on special. 

Don’t Spend Beyond Your Limit

You will need to know what your budget limits are. It is a bad idea to pile purchases on to your credit card until its maxed out and it is even a worse idea to increase your credit limit in preparation for Black Friday, because you are then just going to get into a heap of debt trouble. When debt is unplanned then it becomes difficult to pay it off. 

Have a limit in place that you can afford and stick to it.

What’s Happening with Your Money

You need to know your money. How much you earn, what your monthly expenses are and the balance that is left once everything has been paid for. 

You should take a look at your bank statements each month and ensure they are correct. When you get into the habit of reviewing your finances regularly then you will gain a better understanding of your money and will be less tempted to overdo it on Black Friday. 

Shop Smartly

If you are on the hunt for a bargain, then you need to shop smart. If you have items in your cart that you were already planning to buy and have budgeted for then getting these items on Black Friday can save you money. 

Black Friday is also a great time to get Christmas presents. Make a list of who you need to get gifts for and what gifts you want to get them. You might be able to get some good deals for some presents on Black Friday. 

However, if you buy something on Black Friday that you didn’t plan on buying in any case then you will be going outside your budget. If you are using money that was meant for something else then you may find you can’t spend as much on groceries or going out or you will just blow your budget, which isn’t good. 

Have a plan, know what you want to buy and have a budget and stick to it so you can avoid overspending this Black Friday.

If Moody Cuts its Rating to Junk, This Is What Awaits South Africa

Analysts that have been following South Africa do expect that it will lose its final investment grade rating, however, they disagree on what might happen and the consequences of such. 

The worst prediction is that it would trigger outflows of over $10 billion and will cause the rand to weaken to its lowest level in almost four years. On the other hand, some say that investors have already priced in a downgrade and South African assets could even rise in the aftermath, especially if the feeling towards emerging markets stays strong. 

On November 1st, Moody’s Investors Services cut its outlook to negative. They rate South Africa at Baa3, which is just a step above speculative grade. This followed the budget statement from Finance Minister, Tito Mboweni, which showed that the financial situation of the government is rapidly deteriorating. 

If South Africa is downgraded by Moody’s then rand bonds will be omitted from FTSE World Government Bond Index, which includes 14 currencies such as the dollar and yen and has about $3 trillion tracking it according to Bank of New York Mellon. According to National Treasury data, foreign investors own 37% or about R780 billion of South Africa’s local currency bonds.

So, what are the analysts saying?

Bank of America

The US lender expects that downgrade could happen soon after February’s budget review. They don’t believe that the government will be able to fix the growing fiscal gap or debt laden Eskom. However, Jure Jeric and David Hauner said that markets have priced this in and outflows, might only reach $1.5 billion, especially if tensions over trade ease between the US and China as they continue to float emerging markets. In a note this month they said that South African assets are cheap and post downgrade, the market is likely to rise as uncertainty declines. 

Bank of New York Mellon

Head of markets strategy, Daniel Tenengauzer predicts that if South Africa exits the WGBI then the outflows could be between $8 billion and $12 billion. The selling might not be curbed by the status as the highest yielding country in the index. On average, rand bond rates are 9.2%, about 360 basis points more than those for the second highest yielding currency, which is the Mexican peso. 

Citigroup

According to Gina Schoeman, an economist at the Wall Street Bank, a downgrade in March is possible if South Africa can’t come up with a credible debt stabilisation strategy. There will then be tough negotiations ahead between the government and unions on how spending can be curbed. She went on to say that a WGBI exit could mean between $6 billion and $7 billion of capital could leave the country as it appears that Moody’s tolerance is low.

Intellidex

Peter Attard Montalto, London based head of capital markets research said that it’s 50/50 on whether South Africa will avoid a downgrade after the February budget. He said that to a moderate degree a cut has been priced in and could result in $5 billion of outflows. 

Investec

The banks Johannesburg based chief economist, Annabel Bishop said that a negative outlook instead of a ratings watch could mean that South Africa will be granted up to 18 months by Moody’s to improve its finances. If there is a downgrade, then the governments 10-year local currency yields may increase to about 10%, but they probably won’t rise as much as those in Turkey and Brazil when they were cut to junk. 

Rand Merchant Bank

Fixed income analyst at the Johannesburg based investment bank, Kim Silberman said that Moody’s marked South Africa down due to its politics. She went on to say that a downgrade in March is now possible and the rand may drop to 16 per dollar, which is 7.6% weaker then it is currently and the lowest it has been since early 2016. Schwellnus, a bond trader at RMB said that outflows could be between R30 billion and R200 billion, but he went on to say that this global environment is probably the most ideal for a downgrade to happen in. 

Standard Chartered

Razia Khan, the bank’s London based chief economist for Africa and the Middle East said that they do not see a downgrade as early as March as being at all likely. Rather the negative outlook from Moody’s gives the authorities the political cover they might need to take a firm stance on reforms and a pickup in growth next year may mean a cut’s avoided altogether. Samir Gadio, StanChart’s head of Africa strategy said that even if it isn’t, estimates of outflows of around $10 billion look very overstated. 

Article Source: https://www.moneyweb.co.za/news/south-africa/this-is-what-awaits-south-africa-if-moodys-cuts-its-rating-to-junk/