How to be financially smart this festive season & avoid the dreaded Januworry
With less than two weeks to Christmas, the festive season is officially in full swing. For many, this means lights, family, good food and above all, shopping! It’s the latter part of the festive season that can often wreak havoc on our budgets and savings, all while contributing to the infamous Januworry.
If you, like most people, are getting paid slightly earlier in December, the stretch to January can seem very long, especially if you overindulged during December. To help you to ensure that your salary will make it until the end of January, Cornerstone Financial Planning has put together a festive financial preparation guide that will help you during this happy but tempting time of year.
Set up a budget… and stick to it
Setting up a budget is easy, it’s sticking to it that’s the challenge. When you set up a budget for the festive season, it’s important to be realistic, fair and specific. Make sure that you budget enough funds for essential items first and only thereafter start allocating money for spending and luxury items, not the other way around. When allocating different amounts for different uses, make sure that you are as specific as possible. For example, instead or having a line for “Christmas shopping”, specify each person that you are buying gifts for and allocate an amount for each gift.
Avoid overspending on gifts and luxury items
It’s very easy to get caught up in the frenzy associated with festive shopping that often makes us buy unnecessary luxury items we don’t need and can’t afford. When you see an item you want to buy, regardless whether it’s a gift or something for yourself, ask yourself a few questions first:
“Is this really necessary?”
“Can I truly afford this?”
“Is there a less expensive alternative?”
Even after asking these questions, it is always wise to walk away and think about the purchase for a day or two. Many times, this “break” will give you new perspective and may leave you wondering why you wanted to buy the item in the first place.
Be careful of sales and festive season deals
In a few days, Black Friday will take the country by storm and many South Africans will flock to malls and shopping centres to get their hands on those “once in a lifetime” deals.
“Festive sales”, “Christmas Clearance”, “Year-end giveaways” and “Summer savings” are but a few of the familiar taglines that you should be aware of.
Many of these sales as well as the marketing campaigns that accompany them, are designed to persuade the consumer (you) to spend more money under the vail of apparent savings. Relying on our inherent need for “things” and the added boost of the festive season’s shopping culture, retailers pray on our inability to resist a sale.
It’s vital to remember that many items on these “flash sales” are usually expensive, luxury items which even at a reduced price, will make a massive dent in your budget and cause unnecessary financial strain.
Lock your credit cards and store cards away until January
Ideally, your credit cards and store accounts should be kept for emergency situations, however most of us use them to buy things we want now but can only afford later. Over and above the fact that buying something on credit costs you much more due to interest, you end up using your “emergency funds” for luxury goods. This is not a good way to manage your money.
Rather keep your store and credit cards locked away until January, this way you will have a safety net and backup funds in case you need them.
From all of us at Cornerstone Financial Planning, we wish you and your loved ones a beautiful festive season and a wonderful new year. For more useful and thought-provoking content, remember to follow us on Facebook, Twitter and LinkedIn and remember to share this article with friends, family and colleagues.