By: Farzana Botha
December is approaching like a freight train. While friends, family and festivities may already be part of the journey, there’s a way to manage the angst linked to empty pockets, fridges and fuel tanks so typical of this time of year. After all, a detox doesn’t just have to relate to our physical health. Try it out as part of a financial ‘course correction’, says
We've all experienced that JanuWorry moment of an empty bank account and that sinking feeling that payday is very far away. Typically, most people’s paycheques need to last six-weeks and cover myriad extra expenses, from presents and gatherings to travel and school supplies. Even those lucky enough to receive a ‘13th cheque’ may struggle. To avoid starting the new year with debt, it’s critical to manage money tightly, and ‘course correct’ following the festive ‘binge’.”
Getting the budget back on track following festive overspending takes discipline. It may be best to work with a trusted financial adviser to come up with a realistic plan.
Here are some tips to ‘course correct’ and stop the spend:
- A budget ‘cleanse’: Consider implementing a short-term, corrective budget to course correct. Think of it like a detox after a massive meal; relook your budget to drastically cut down on non-essentials to get back on track. Take the time to work through your bank statements and look at every line. Be ruthless about eliminating what you don’t need. Consider a budgeting tool that works for you, like zero-based budgeting, the ’50-30-20’ method or cash-stuffing.
- Talk about it: There’s something very cathartic about ‘coming clean’ to your family and friends about where you’re at. Chances are, they’re feeling the pinch too. Share your savings hacks and budgeting goals to keep one another accountable. Often, we feel the need to keep up appearances. It can be very refreshing – even affirming – to be honest with and supportive of each other.
- Assess your debt: Credit card debt can wrack up exponentially over December. Honestly assess your debt and plan to pay back what you can as soon as possible. Look for ways to pay more than the minimal monthly instalments and consider the ‘snowball’ strategy, of paying off the smallest debt first to free up funds for the next smallest debt, and so on.
- Hack your spending: What spending behaviours are undermining your long-term goals or leading to unnecessary expenditure? Go through your statements to categorise expenditure and look for patterns like regular trips to the grocery store or sneaky online sales shopping. Once you see the habits, you can start to change them; for example, eat in more regularly, pack lunches for work, and buy in bulk when you can.
- Maximise your rewards programmes: You probably have rewards programmes with your bank or insurer that offer vouchers and discounts at retailers. Make sure you are aware of these benefits and actively taking advantage of them. Many retailers also offer rewards ‘stamps’ or points that accumulate to offer significant savings.
- Long-term, realistic budgeting is key: Once you are back on track, relook your monthly budget and ensure it includes long-term goals such as your retirement planning and building up an emergency fund for those unexpected curveballs.
- Start planning for December 2024 in January 2024: Plan ahead to avoid feeling the JanuWorry pinch again. If you can, resolve to save something each month in a special ‘December 2024’ interest-earning account or stokvel, so you’ll be ready for festive next year. Consider buying your gifts throughout the year, rather than panic buying expensive items the day before. That way, you can also capitalise on seasonal sales as 2024 unfolds.
- You might have to endure some short-term ‘pain’ as you rein in the spending to get back on track, and, most importantly, feel in control again. A budget ‘cleanse’ can be the best way to start addressing debt, break bad habits and purge the December splurge. There are many tools available to help you on this journey. Speak to a trusted financial adviser who can appraise your situation and suggest a holistic and achievable plan.
* Farzana Botha is the segment manager at Sanlam Risk and Savings.