As the saying goes, “The rich rule over the poor, and the borrower is a slave to the lender.” Don’t let yourself be enslaved by debt. If you don’t have the money, you can’t afford to spend it.
With the festive season approaching, many of us start thinking about how to fund it, what to spend on, the activities we'll enjoy, and the places we’ll visit. While this time of year is exciting, it can also be expensive. Without proper financial planning, you might find yourself in a tough situation come January—trapped in debt that could take a toll on your well-being.
Good financial planning, however, will allow you to enjoy both the festive season and the New Year with peace of mind. Imagine starting the year with your finances in order, rather than dealing with debt collectors and endless calls from creditors. Here are a few key tips to help you manage your money wisely:
1. Budgeting
Start by being realistic about your income. Focus on your actual monthly net income, not expected bonuses or 13th cheques. Then, list your regular expenses such as housing, electricity, petrol, food, and school fees. Drawing up a budget helps you manage your finances and avoid the need to borrow.
2. Gifts
While it’s tempting to splurge on gifts for your kids, family, and friends, the excitement quickly fades when the bills come in. If you haven’t budgeted for gifts, resist the temptation of flashy store ads urging you to “shop till you drop.” Relying on credit cards to buy gifts means spending money you haven’t earned, and it could lead to financial stress when it’s time to pay off that debt. If you don’t have the funds for gifts this year, it’s okay to skip it. Don’t let pressure from others push you into spending beyond your means.
3. Holidays
Holiday trips are often planned well in advance, and prices tend to skyrocket during the festive season. If you’re traveling, it’s more cost-effective to book early. Consider staying in self-catering accommodation to save on food expenses. Plan and budget for paid activities ahead of time, and if you haven’t saved for a holiday, it’s wiser to stay home. Never borrow money to fund a trip.
4. Save for Emergencies
During the festive season, many general practitioner (GP) offices are closed, and if you need medical care, emergency room visits often require out-of-pocket payments. Travel can also lead to unexpected car troubles, such as a punctured tyre or a breakdown. It’s crucial to save for emergencies like these to avoid additional financial strain.
5. Plan for January
January can be an expensive month, especially since many people receive their December paychecks around the 15th and won’t be paid again until the end of January. That’s about six weeks with no income. Try to prepay for essentials like electricity, food, uniforms, and stationery. Set aside money for groceries and petrol, and take advantage of supermarkets offering discounted prices on essentials.
6. Using Your Bonus Wisely
If you receive a bonus or 13th cheque, use it to pay off credit card or store card debt, which typically carries high interest rates. Also, consider using the money for school fees, uniforms, and stationery if you have children. Prioritise these important expenses over festive indulgences to avoid financial stress in January.
7. Smart Shopping
Wait until after the festive season to buy clothes, when prices drop and stores offer big sales such as 50% off or “buy one, get one free” deals. Shopping around for discounts can save you a lot.
8. Pay Your Debt
While it’s the festive time and you may be on holiday, creditors don't offer payment holidays. Missing payments in December because your priorities shifted to seasonal spending will only create problems. Make sure you pay your debts on time, as creditors do not take missed payments lightly.
If you’re already struggling with debt, don’t wait until after the holidays to deal with it. It could be too late by then. Seek help from a debt counsellor now, who can help you create a budget, negotiate with creditors, and arrange for reduced interest rates or instalment payments.
Enjoy the festive season, but remember to spend wisely!