It’s the festive season again – time to be carefree and enjoy the holidays and the sun. Fun rules and money, well, money is for spending, isn’t it? Suddenly it’s the end of December, and you have spent all the money you shouldn’t have, and the New Year and a long, moneyless January loom ahead of you.
Like thousands of others, you will be asking yourself, ‘How did this happen?’
The answer is simple, says John Manyike, Head of Financial Education at Old Mutual. You have let the excitement and expectation of a great time lead you when everything is designed to encourage you to spend.
“The hard truth is that you are left with an empty wallet or purse because you have let fun rule and been encouraged to spend by the cheerful retail atmosphere and happy people around you. You have succumbed to your destructive desires and poor financial habits. The result is that your crowd pleasing feelings have encouraged you to spend, spend and then spend some more.”
The reason that you are broke and are already starting to worry about where those stationery, transport and school fees are going to come from is that you have:
- Forgotten the golden rule that says that what you need and what you want are two different things.
- Let the decorations, music, and special offers make you feel you are saving money with every swipe of your credit or debit card.
- Bought to impress. After all, isn’t it true that the more you spend on others, the more they will spend on you?
- Been a generous host. People have responded to your invitations, arrived in numbers and enjoyed your catering and booze. Your rapidly reducing bank balance shows confirmation that everybody had a good time.
- Spoiled the kids. What is a week at the beach without kids being able to buy takeaways for themselves and their friends when they want them?
- Relaxed and believed that this only happens once a year, so there would be plenty of time to get back to normal in the first few months of the new working year. School fees? Why worry about bills when the sun is shining, and the beach looks so good?
- Joined the annual choir festival that always sings the chorus that says January is a long month, isn’t it?
“Following these activities will ensure that you have a great holiday and are left with good memories, but the people and the credit providers you owe money to may not be as understanding,” says Manyike.
However, he says, it’s possible with a bit of thought to have fun, spoil the kids and friends and still have a great festive season – one that will seem even better when your accounts can be paid at the end of January – the month that seems to stretch forever before you when you have overspent.
Things to think about are:
- Pay your accounts on time or early if you get paid early in December to avoid spoiling yourself with money that belongs to your normal monthly instalments.
- Never enter the festive season without a budget and stick to it.
- Remember that there is life after December, therefore don’t spend money like it’s the end of the world.
- If you get a festive bonus, prioritize your debts, your living expenses and back to school expenses before you indulge.
- Booking ahead. The earlier in the year you make that holiday booking, the better the chances are that you can enjoy yourself by ‘paying now and enjoying later’ instead of ‘enjoying now and paying later’.
“This makes sense from several points of view. The main cost of the holiday is spread across the year, and more money is available for the holiday. The earlier that bookings are made for flights, the cheaper they are. Using rewards points accumulated during the year can also reduce costs,” says Manyike.
- Budgeting for a holiday. It may seem obvious but having a budget for a holiday can save a lot of stress. It is also a great time to begin teaching children the basics of money management by giving them pocket money rather than allowing them to spend as they please.
- Agreeing to a budget for gifts. Having a family meeting and setting a limit for gifts ensures that everyone is catered for, and nobody does better than anyone else.
“In these stressed financial times, most people will be secretly relieved when a gift budget is set. It can make buying gifts more enjoyable as the challenge of staying within a limit means more thought is applied to selecting them,” says Manyike.
“Shopping centres may be crowded but delaying gift buying can also reap dividends. When it comes to many items, particularly festive foodstuffs, prices drop when storekeepers realise that they are overstocked as they do not want to carry goods into the New Year.
- Sharing party costs. With the summer weather at its best, holiday time is ideal for enjoying the outdoors. Spreading the costs by having different people bring separate dishes for meals or picnics is practical and enjoyable. Everyone, including the holiday budget, scores. “The choice is a simple one. Budget, cut back, plan and start buying holiday items early in the year, and look forward to happy holidays and an early, carefree entry into 2023, or get caught up by the festivities and suffer financially well into the New Year.”
When it is considered, the gain from planning is better than the pain of not planning, be disciplined” says Manyike.
