School uniforms, textbooks, a financial season financial hangover – it’s difficult to make it through the year-end financially unscathed and in the black.
Add to that the Covid-19 pandemic, which wreaked havoc with economies and people’s incomes across the globe, and leaving 2020 behind in a sound financial position seems harder than ever before.
“There are several ways in which consumers can make the most of what is left of the year to enter 2021 without a financial hangover, however,” says Deon Nobrega, Managing Director of Paymenow.
Avoid debt
Sometimes, debt is unavoidable, such as when there’s an unexpected illness. Generally, however, debt is a four-letter word that should be avoided at all costs. If you can’t buy that item for cash, don’t buy it, is the general rule. If you will be using a credit card, make sure that you earn rewards from it.
Save when you can
If you are fortunate enough to receive a 13th cheque, and this is certainly not guaranteed into today’s environment, don’t splurge on that TV you want. Rather use it to save for a rainy day, as they say. This may be the sudden need to buy a whole new set of school uniforms because your child has suddenly shot up. The same applies to tax refunds, for example.
Pay off debt
If you are fortunate to get a windfall, you can also consider paying off some of your debt. One way of putting away money and paying off debt is to split your windfall 50:50. Half into a savings account linked to your usual account, and half into the debt, such as a credit card.
Shop during specials
We are all familiar with the ‘Back-to-school’ sales shops have. Take advantage of these whenever possible for key items. You’ll be able to use the local newspaper to find deals as the knock-and-drops are full of brochures where you can find deals.
Stick to your budget
Avoiding a splurge when there are so many twinkly lights in the shops can be difficult. This is why you should make a list of those who you are buying for, and what you are getting them. Set a spending limit for each person and stick to it.
Spend what you have
Of course, you can only budget if you know what you have to spend. Calculate how much money will definitely be paid to you and make a list of your regular expenses, and you’ll have a budget. When using a debit card, keep good records or use your bank’s SMS alert system. Set SMS notifications for the smallest amount possible so you know exactly how much you have left.
Talk to your bank
If you are not certain how to go about paying off your debt, ask your bank if you can speak to a consultant who will help you prioritise what you pay off sooner. Some advocate paying off the higher interest items as fast as possible. This frees up more cash to keep paying down other items. Others say you should pay off the smallest debt first, because a success motivates you to keep on going. Your bank will be able to help you decide what to tackle first.
“After a really tough year, most South Africans will have six weeks between their December payday and the January salary landing. That’s a long time for many who have been battling throughout the year. The key thing to remember is to not let emotions get in the way of making sound financial decisions. This way, you can emerge from 2020 as unscathed financially as possible,” concludes Bryan Habana, Paymenow’s Head of Business Development.
PERSONAL FINANCE