“If only I hadn’t spent so much of my money this Festive Season” cried Ntombi. “Perhaps if I’d cut back on some of the social events, maybe just a few.
I’d have a little money left to pay for my taxi fares and airtime this month. Or maybe if I‘d put a little of my Christmas bonus away and labelled it ‘My January Emergency Fund’ I’d be in a less stressful place right now. In December I forgot to go pay the children’s school fees - now I’ve spent their money as well. What am I going to do?”
As the most expensive time of the year has come and passed, we need to be extra careful not to overspend our money. January is traditionally the toughest month of the year. December is expensive with gifts and celebrations, as well as the fact that our December salary usually comes earlier than usual. Our money must stretch for nearly 6 weeks, instead of the standard 4-5 weeks. This puts extreme strain on our financial situations, but this is not a good reason to get further into debt and seek a loan.
Let’s not allow January’s problems to create a never-ending Christmas hangover.
If Ntombi’s crisis sounds familiar, now is the time to take control and start the year with a plan to improve your personal finances.
Let’s review the rules
Don’t get into debt
Getting deeper into debt is only going to make your future self-poorer. Who’s going to pay for the loan next month? If you don’t have the money today, what will change next month to allow you to afford the extra loan?
Budget: Plan your spending
It is more important than ever to budget the money you have each month. You cannot afford to spend all of your earnings without planning. If you know where your money must be spent, you will know exactly how much you have left over for the luxuries in life. Make sure you pay your bills first and yourself later.
Shop Smart: Plan your
monthly shopping trips
Write a grocery list! Do a separate list for each week of the month.
Week 1 will be your main shop, so it will have long life products, dry goods, fruits & vegetables as well as your household items such as cleaning products. The following week should only be small, buying things like milk, bread and vegetables. The third week you may have run out of many things, so you’ll need to do another big shopping trip. Week 4 will be your smallest as funds are running low, so this week just buy the ‘must-have’ items.
Stick to your grocery list, do not give in to temptation! Remember, the shops will tempt you to buy things you don’t need.
Smart Shopping: 4 Secrets
Take your own shopping bags
Add up how many bags you buy a week and multiply this by 4 weeks in a month, and 12 months in a year. Your answer is the money that you throw away every year. This is wasted money; it’s an unnecessary expense.
Never go shopping
whilst you are hungry
You’ll be tempted to buy more food items and treats. Shops play nice music; have the smell of cooking food in the deli and treats in the bakery. Then they have chocolates, sweets and biltong by the pay registers. These are all tricks to tempt you to buy what you don’t need.
Plan your shopping trips
and stick to your plan
Keep your grocery list handy and update it everyday. Soon you’ll have a pattern of your shopping needs, and temptation will no longer be a problem. Soon you will be making ends meet, your salary will be going further, and you will have spare money for the more important things.
Don’t forget to compare prices in each shop you go to. You’ll soon know which specials offered are a good deal, and which shops are best for you to buy from. Know what type of groceries you need each week before you choose which shop is best.
Live within your means
There’s no point buying things that you can’t afford. Will Smith recently said: “Too many people spend money they haven’t earned, to buy things they don’t need, to impress people they don’t like”. It is possible to live within your income; it takes discipline. Plan what you spend, and never buy on impulse.
Always have an emergency fund
By keeping an emergency fund (at least one month’s salary) you’ll no longer have to go into debt when an emergency comes along. Your peace of mind knowing you have a “back-up” plan will alleviate a lot of financial stress from your life.
Pay your bills on time
Your bills don’t pay themselves. If you don’t pay them each month, you’ll have to find double the money in the next month. Some creditors may even charge you interest on late payments.
Prioritise your debts and
pay them off quickly
Schedule all your debts in order of the amount of stress each one causes you. As you pay one debt off, use that money to pay off the next one. The quicker you can pay off your debts, the less the interest you have to pay.
Share the costs of social events
Everyone is feeling the blues after the festive season, but this doesn’t mean we don’t want to see our friends and be social. Invite your friends to your house, and task each person to bring a dish of food enough for the group you have invited. This way you can cut costs down to just one plate of food. Entertainment outside of the home is much more expensive.
Pay all your bills and debts on time. Live within your means and stick to your budget. You too can enjoy a stress free financial future. Good luck, you can do it!
* Names in this article have been changed
Author: Lechedzani Pitso – Financial Wellness Trainer with S.C.I. Training (Pty) Ltd. © S.C.I. Training run BOTA (BQA) accredited financial wellness programmes in Botswana. For help and information contact them on 3180243 or 72309718 or [email protected]