Black Friday

Black Friday

Black Friday is next Friday, November 29th. This annual shopping event takes place the day after Thanksgiving in the United States and has become a global phenomenon.

I am sure your inbox this week has been filling up with these, just as mine has.

Buy Nothing Day

We all know about Black Friday, but how many people know of “Buy Nothing Day”?

Buy Nothing Day was more to a movement towards reducing “conspicuous consumption”,  where early economist Adam Smith reasoned that many people choose to buy some goods because of what those goods reveal about their standing in society - and not because of any intrinsic enjoyment they get from the purchase.

Of course, Buy Nothing Day will be hard-pressed to compete against the advertising spend of Black Friday. Yet, it reminds one that you want to clean out your cupboards before the December holidays and donate unwanted items to charity. And this, in turn, reinforces that we only need so much.  

Black Friday can be useful for things you need

At the same time, Black Friday specials can be beneficial when you need something.

After the first few years, Black Friday extended to the weekend, and now it seems to last until the end of November for many retailers.   

I needed tyres for my car a few years ago, and I came right here using the Black Friday special.

Every two years, I also use Black Friday to renew my mobile contract, and most often, I receive either an extra data package or something similar. One year, I even sold off a TV when it was still new in the box.

Where I have older children today, I have found Cyber Monday, just after the weekend, also useful for their computer needs.  

And if there are any specials at the food retailers, my wife will buy our festive season meats for the holiday braai, but only if the price is truly favourable.     

For wine drinkers where wine can be stored for very long periods, some wine farms such as Lemberg and De Grendel, for example, have their best specials around Black Friday.

Checking Black Friday Specials to see if they are really “Specials.”

We all get that eery feeling on the occasion that possibly, sometimes, these Black Friday “specials" see certain retailers simply increasing the price of the item the month before – that for when Black Friday comes, it appears to look like a discount when it’s not.

To test this for something you need, an independent website you can use is Serval Tracker

Serval Tracker works on Takealot offers and tracks the price of the item over the last year. You just insert the URL of the item you want to purchase, and you’ll receive the full price history over the last year or two, including if it went on sale last November.

If the item is available via Takealot, you can use that price to compare to any other site or store to check for reasonability.  

Nedbank joins the chorus of warnings for South Africa – BusinessTech

Of course, Black Friday also presents an opportunity for fraudsters or scammers to take advantage.    

Nedbank shares via Business Tech, their expectation of increasing fraud, which you can read by clicking on this link;  Nedbank joins the chorus of warnings for South Africa – BusinessTech

Nedbank is not the first bank to offer this warning, with many expecting a rise in online fraud, share a few steps you can take to secure yourself more;

How to avoid being scammed

Amid the likely rise in Black Friday scams, Nedbank shared the following tips so that South Africans can keep themselves:

  • Never share your card PIN, expiry date or CSC number (the 3- or 4-digit security number) over the phone or on websites accessed via links in emails or text messages. We will never ask for these details to reverse a fraudulent transaction.

  • Carefully read banking notifications and notify your bank of suspicious transactions. 

  • Use virtual cards for one-time online payments and cancel them after use. You can have up to 5 virtual cards at a time. 

  • If your mobile device is lost or has been stolen, notify your bank immediately. Nedbank customers must deactivate the Money app and remove digital wallet tokens linked to your card. 

  • Suspect a fraudulent SIM swap? Contact your service provider to block the SIM card. 

  • Avoid online shopping or banking over public wifi or unsecured networks. 

  • Be aware of new or unknown online retailers 

  • Please do some research and check their online reviews. 

  • Don’t enter your card information on websites with unrealistically low-priced products and have T&Cs that automatically subscribe you to long-term monthly payments. Always read the T&Cs.  

Understanding the Tax Implications of Withdrawing from the New Savings Pot for Black Friday Deals

With Black Friday just around the corner, the temptation to snag incredible deals can be overwhelming. However, suppose you’re considering withdrawing from your retirement savings to fund your shopping spree. In that case, it’s crucial to understand the tax implications and long-term consequences of such a decision, especially with the new savings pot option in South Africa.

The New Savings Pot: An Overview

The new savings pot allows individuals to withdraw a portion of their retirement savings before retirement without the severe penalties traditionally associated with early withdrawals. Instead, these withdrawals are taxed at your marginal tax rate, which is the rate of tax you pay on your last rand of income.

Marginal Tax Rates in South Africa

South Africa’s marginal tax rates for individuals are progressive, meaning the rate increases as your income increases. For the 2023/2024 tax year, the rates are as follows:

  • Up to R237,100: 18%

  • R237,101 to R370,500: 26%

  • R370,501 to R512,800: 31%

  • R512,801 to R673,000: 36%

  • R673,001 to R857,900: 39%

  • R857,901 to R1,817,000: 41%

  • Above R1,817,000: 45%

When you withdraw from the new savings pot, the amount is added to your taxable income for the year and taxed at your marginal rate. This can push you into a higher tax bracket, increasing tax liability.

Considerations Before Withdrawing for Black Friday

  1. Impact on Taxable Income: Adding a withdrawal to your income can significantly increase your tax bill. For example, if your annual income is R500,000 and you withdraw R100,000, your taxable income becomes R600,000, potentially pushing you into a higher tax bracket.

  2. Long-Term Financial Health: While the new savings pot provides flexibility, it’s crucial to consider the long-term impact on your retirement savings. Withdrawing funds now means less money growing through compound interest, which can affect your financial security in retirement.

  3. Alternative Funding Options: Before withdrawing from your savings pot, explore other options such as discretionary savings or even personal loans, credit cards. These alternatives might have lower financial consequences than the tax implications of withdrawing from your retirement savings.

Conclusion

The excitement of Black Friday deals can be tempting, but weighing the immediate gratification against the long-term consequences is important. Withdrawing from your retirement savings, even with the new savings pot, can lead to significant tax penalties and jeopardize your financial security in retirement. By exploring alternative funding options and planning, you can enjoy the sales without compromising your future.

Stay financially savvy and make informed decisions to protect your retirement savings. Happy shopping and smart saving! 

Friday Food for Thought