Regokgopetse Patak, Absa Product Manager - ECM and Rewards, and Tuelo Gabonewe, Absa Communication and Social Media Specialist( Strategic Comms Everyday Banking), provide us with insights on how to use a bonus, cater for the home loan obligation, and how to start the New Year without minimal financial stress.

Q: The end of the year is fast approaching. What should homeowners be doing now to ensure their financial sustainability over the festive season?

Rego: The recent interest rate hike will put pressure on homeowners, so they will need to be savvier with their finances during December. It also means that a majority of consumers may not have the excess money they usually have during the festive season. This requires 'special' budgeting, putting into consideration how the increase in the interest rate will impact the monthly home loan obligation and other banking services that the client uses, such as credit cards.

It would be a good idea to revisit any budget that has been set for December and rework those figures, trimming if necessary. It may mean sacrificing a visit to a restaurant or not spending as much on presents, but the alternative is buyer's remorse, which will kick in during January when the holiday is but a memory. Scrambling to make ends meet at the beginning of a year can be very depressing, and with many getting their December salary earlier than usual, it will feel like a very long time before the next pay cheque arrives.

Making such sacrifices doesn't mean not having fun. Alternatives like a picnic in a park or on a beach can involve the entire family, with each member of the family making a contribution, whether it's cooking something or offering to clean up. Walking, instead of driving, is another, and so on. There are hundreds of ways to save or stretch money. My best advice is that old adage: "take care of the cents, and the Rands will look after themselves" - the point being to consider very carefully what you are spending your money on, whether it is necessary or needed, and how you may come to regret an impulse buy!

Q: Is there an option for home loan account holders to make additional payments now to cover December/Jan instalments, or will the debit order still go off every month despite additional payments? What is the reason behind this?

Rego: Homeowners can pay more into a Flexi Reserve account if they have one or make arrangements now to secure one with Absa. In this way, they have an option to capitalise on the extra amount they pay (in other words, this additional payment will go towards the home loan instalment) or can retain it in the Flexi Reserve account for future use. If the choice is to capitalise the prepaid funds, the instalment will be recalculated, and this could lead to a reduction in the minimum monthly payment.

However, prepaying into the home loan account does not remove the obligation for the customer to meet the monthly instalment, as this is a contractual obligation as per the home loan agreement.

Given this, my recommendation is that homeowners need to budget an extra amount to cover the December home loan monthly instalment and, if possible, should pay this as soon as they receive their salary. In this way, they have the reassurance that the obligation is met and that what is left can be used to cover other expenses or directed to having 'fun'.

One of the ways through a tough financial period, but only if homeowners have prepaid amounts in the home loan account and the bank allows them to access those funds, they can withdraw these funds. Generally, such funds are made available at the bank's discretion. One should also take into account the fact that withdrawing from these funds may increase the outstanding balance, and the instalment, as a result, may be recalculated to higher instalments.

Q: What is the wisest way to use any bonus in December relative to home ownership?

Rego: Homeowners that are keen to invest in their homes, especially in the current environment, should consider using an annual bonus to start an alternative power solutions journey. This will help to reduce the impact of load shedding and possibly save on electricity costs, thus making their home more energy efficient. It will also lessen any frustrations around load shedding.

Of course, paying the bonus directly into a home loan account will reduce interest rate charges, which will make it easier to cope in this current interest rate hike period.

Renovations are also a good way to invest a bonus, especially if renovations will realise an income, such as building a rental cottage or increasing the value of the property. A bonus can also be used to do necessary maintenance around the home, especially issues that could escalate into large problems if left unattended. This is important because if negligence is revealed to be the cause when making an insurance claim, it may be rejected.

How can people exercise more financial discipline, and what can they do in advance to ensure this?

Tuelo: Balance is the magic word, whether it's a diet or managing a lifestyle. Start with a review of your finances. A general rule of thumb suggests that roughly 50% of your income should be used for fixed payments (like your home loan, vehicle finance repayment and insurance), 30% for necessities like groceries and savings accounting for 20%.

Here are some tips to get you started:

• Prepare a realistic budget, plan for essential purchases like bread and milk first and leave the luxuries for last (remember to compare retailers' offerings and seek specials throughout the month).
• List your fixed costs and expenses (bond repayments, education fees etc.), followed by your variable or changing costs (water and electricity, telephone bills etc.)
• Add all your expenses together, and if this figure is close to or more than your monthly income, you need to reevaluate and cut down.
• Ideally, you should limit your expenses and put a monthly fixed amount (20%) towards savings. Savings accounts allow you to grow money that is invested. Absa has a range of facilities to suit every budget, such as a Tax Free Deposit Account or TargetSave.
• Savings accounts are designed to encourage savings. Many are therefore designed to limit transactions to two a month.
• Find the best banking option for you. Often substantial savings can be made on service charges.
• Review your short-term insurance annually and your car insurance which depreciates in value every year.
• Be responsible with credit. Buying on credit may be convenient, but it is important to understand the ramifications of your decisions around debt and to align your lifestyle to what you can actually afford.
• Be disciplined - Budgeting and planning for the future require steadfast commitment. A contractual savings account allows you to save a selected amount every month for a chosen period of time.
• Seek professional advice because navigating through all the savings and investment options on offer can be confusing. Visit your nearest Absa branch and tap into our professionals, who will present a number of options for your unique circumstances.

If all else fails, and you anticipate that you will be struggling financially, speak immediately to one of our home loan experts, who will provide the best way for you to move forward. Do not wait until you are in trouble - in most cases, people realise what is ahead. Taking action early avoids any further distress.

Q: Cash (ATM) or card payments? What is the most cost-effective way to pay for goods and services today, especially when in unknown holiday locations?

Tuelo: There really is no one-size-fits-all approach when it comes to payments. Depending on the need, there is a place for both cash and card/contactless payments in South Africa. However, there are definite benefits to using a debit/credit card. All Absa-issued debit and credit cards are now contactless-enabled, and the customer uptake has been strong.

Over and above the contactless card options, Absa customers have a number of additional options when making contactless payments. They now have access to QR Payments, Apple Pay, Google Wallet, Garmin Pay, Fitbit Pay, as well as Samsung Pay, all of which are convenient depending on the retailer's options.

Since the introduction of these digital contactless wallets, customers are increasingly enrolling their debit and credit cards to their smartphones, wearables or tablets. From an Absa contactless card perspective, the security on the cards is extremely strong, with the card details unable to be scanned by another device through the near-field communication technology that enables the 'tap and go' functionality.

There is a tendency for people to 'forget' about all the card transactions they have authorised, especially when in a festive environment. This makes a case for cash because once cash has been spent, that budget is now exhausted, and the person may hesitate to draw more or swipe a card. Cash withdrawals, however, require vigilance, and it is recommended to limit the amount you carry lest you be a victim of crime.