By Kenosi Magosha, 19 December 2017
Kenosi Magosha, Head of Client Solutions Savings at Sanlam Personal Finance, says that people need to work smartly with their money to avoid the financial ‘hangover’ in January. Here Magosha provides advice on how to successfully juggle needs and wants against funds available by creating a behaviour spending plan. This plan consists of a budget, covering spending plans and income, and things you should be doing to avoid financial trouble traps:
The goal is to avoid financial distress by not spending more money than what you have. Look at how much money you will have in total (e.g. salaries, bonus, stokvel pay-out) from November to January. Then list what you want to spend money on split into “needs” (e.g. rent, debt) and “wants” (e.g. big parties). Prioritise payment for “needs” items and automate payment using online-banking payment scheduling. Note the dates of payments for those you can’t automate.
You may receive a number of offers to buy those “wants” on credit, only to experience financial distress in 2018. Debt is a stressful way to kick-start the year and it will slow your progress to financial freedom. Besides, you could end up paying more than you bargained should interest rates increase.
Use some of your cash pay-out for things on the “needs” lists like school uniforms or starting a small business and the rest to treat your family. Engage your grocery stokvel to buy usual grocery to reduce your grocery bill or to buy children’s school items in bulk.
Whether you shop online or at the mall, avoid overloading your cart with clutter or extra things you don’t need in your home.
Rather shop at grocery shops outside malls and early to avoid additional cost of eating out should you be going around lunch time.
Challenge family and friends to a different type of giving this season through a bring-and-share approach at gatherings and avoid buffet style with endless options. This way, the cost of entertaining can be shared whilst enjoying time together. Also, manage the extended family demands to overspend, which usually come when visiting family over this season.
Start your New Year with a meeting with your
financial planner to get your money resolutions in order. When February 2018 rolls around, start putting aside small amounts each month to ensure that you have some fun in December and are able to smoothly navigate back-to-school demands in January.