Durban - Christmas is always on December 25 – yet people seem to be in shock every year when it arrives. There is nothing worse than living in debt for months after Christmas because you did not wake up to this fact.
You have the whole year to plan for the festive season and you should buy your presents at sales throughout the year.
Shops clear Christmas goods in January – buy your wrapping paper and Christmas cards then.
However, if this Christmas has caught you on the hop, you have two pay days left (that is if you get paid early in December). If you have not started planning for this season’s expenses, promise yourself that you will plan ahead next year. You have 12 months to do it.
Remember too that in many companies, bonuses are unlikely this year, as are salary increases. Have you planned for this or even understood this could be your reality?
The festive season normally causes financial stress in families, fuelling resentment and anger that lasts for much longer than Christmas day.
Children have bought into the consumerist lifestyle encouraged by television and the media and supported by their parents.
This year, children should understand that the excesses of previous years can no longer be sustained.
Start educating your children now and make it an ongoing education so that they leave your home with financial savvy and commitment to their financial future.
Spending money you do not have is a recipe for disaster, and credit-card debt is the most expensive type of debt to get yourself into.
Unless you are paying your credit card off every month, you will be buying items at a higher price, depending on the interest you are being charged, and this bill can be like a permanent financial hangover.
Buying on “budget” when using your credit card is a misnomer as this just means that you are locked into a higher interest over the period you have budgeted for.
How to plan for next year
+ Plan for Christmas throughout the year. Save R125 a week which is R500 a month for Christmas – this means you will have R6 000 available in December with no undue strain on your finances. Whenever you draw up a budget, plan for the eventualities that you know are going to happen – holidays, Christmas, birthdays, car repairs, home maintenance – and put this money into a designated account so that you don’t dip into it when a month is “tight”.
* Buy presents throughout the year – don’t wait until December.
* Start shopping for festive things now – if your local supermarket has a special on soft drinks, wine, chips, etc, buy them and put them away for the holidays.
* Beware of sale goods – stores often have certain goods on sale to lure you in – be clear that you buy only those goods and also be clear on the price. Often what we perceive to be a “sale” may not be that and certainly buying “sale” goods on credit will cause financial harm by the interest added to that purchase.
* Have a list when you shop and stick to it.
* Write down what you are buying each person and with the price you paid next to it so that you can track your Christmas spending. If you have bought goods on interest, write this down too so that you can calculate the actual cost.
* Have a budget and stick to it.
* Change your spending habits – perhaps suggest to the adults in the family that you put names in a hat, draw a name and buy only for that person. Make it a “fun goody bag” with a ceiling price attached.
* Instead of buying gifts for friends, have a dinner party to celebrate your friendship and then everyone contributes towards the festivities. There are lots of ways to be creative and enjoy friends and families without getting into financial stress.
Financial New Year resolutions
* Pay yourself first – treat yourself like your creditor and set up a debit order and deposit 5 to 10 percent of your salary into a savings or investment account. Never wait to see what you have at the end of the month to save, chances are you would have squandered on cluttering up your home or cupboards with things you don’t really need or wear.
* Be patient – buy and hold – do not cash out unit trusts and retirement plans because the markets have gone down. The majority of investors do this causing huge financial pain for themselves.
If you are patient, the returns on the JSE are stable and usually positive, but if you look at them yearly they can vary dramatically.
Be patient if you are investing for your retirement, your plan should be for at least 20 years.
* Learn about good debt and bad debt. Borrowing and spending money is as important as our other favourite pastimes – braaivleis, rugby and moaning about the country - but debt can sink you faster than the Titanic.
Good debt is your bond and education, bad debt is anything that declines in value – any disposable item – clothes, holidays, gifts, restaurant meals and even your car. Admittedly, we cannot afford to buy cars for cash, but keeping them for five years longer instead of buying them every five years could well be one of the wisest financial decisions you can make.
* If you cannot afford to pay cash, then you cannot afford it. Credit cards make things easily available, yet you easily lose track of what you spend. How much harder is it to hand over cash than it is a piece of plastic?
* Spend less. Live within your earnings. No matter what you earn, spend less and you will become rich, spend more than what you earn and I guarantee that you will become poor.
* Budget. The most common reason for financial failure is that people have no idea of how much they are spending or even what they are earning! Start by listing all your income streams and then write down your fixed costs. Once you have this list, you can start drawing up your budget – then the fun starts. Start cutting down all those unnecessary expenses, like restaurants, alcohol, movies and travel, and bring them more into line with your income.
Ask yourself what you can live with, live without and what your focus is for your life.
* Budget for your budget busters – Christmas, holidays, retrenchment and car hassles – and create a rainy day fund. - Daily News
* Susan Mercer-Williams is a financial planner and wealth coach based in Westville. Visit www.wealthcoaching.co.za
She will be a speaker at the Live Life Successfully in the Single Lane, in Durban, on Saturday November 16.
For more information, phone 082 601 3868.