Cure for the eight weeks of Jan-u-worry

South African consumers who are in the thick of the eight weeks of Jan-u-worry can find a cure to ensure they do not have to endure it again, but it requires them to start doing something about it now.

Munya Shumba, financial advisor at Discovery Limited, says we should start by recalling what Jan-u-worry is. “In most parts of the world, typically in December, many employees are paid earlier than usual and for employees fortunate enough to have the opportunity: a 13th cheque.

“In the middle of December, most employed South Africans have more money than usual in their bank accounts. They were just paid at the end of November and halfway through the next month, they received another pay cheque. What could go wrong?”

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But by the middle of January, they are struggling financially. How can there be such a 360 degree turnaround in such a short period of time?

Have extra money? Spend it!

Shumba recalls his first experience as a victim of Jan-u-worry in December 2008 when he was working part-time as a university student. “We were paid early in December to help staff plan for Christmas. However, as a student with much free time on my hands, no lectures and no responsibilities, I spent that time and the “extra” money going out.

“I did not actually have any more cash than I would have had over a two-month period, but I was not used to having all these extra funds all at once and in my naivety, I started spending more than usual.”

He says he spent money on everything from exorbitant midweek lunches to spontaneous midnight parties at the most exclusive bars in Manchester. “I never thought twice to go. I did not question it, because it seemed every time I swiped my card, it worked and I seemed to always maintain a healthy bank balance. This was the case until, well, it was not.”

After the rent debit order went off at the start of January, following a New Year’s Eve celebration to remember, reality hit very quickly when Shumba checked his bank balance and he stared down a long 31-day barrel to the next payday.

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Impulsive spending made January torturous

He says that January was financially torturous. “Even to this day, 15 years later, I remember the pain of taking noodles for packed lunches to school and work every day and watching enviously as my fellow students and co-workers carried on spending as usual at the canteens or ordering takeaways.”

In those moments, Shumba says the frivolous midweek lunches at San Carlo, one of the swankiest restaurants in Manchester and boozy evenings in the city centre in December did not seem worth it anymore.

“As I searched high and low for bargain deals on bulk noodles that January, I vowed never to be in that position again and would never again be caught in the trappings of December by getting carried away with everyone else living in the moment.”

Shumba says that experience was his first insight to acknowledging that, as human beings, without a clear-cut plan on how to budget, when given the opportunity we will generally spend the additional money we have, perhaps because we naively believe the party will not end, or that we are entitled to live it up a bit.”

His second insight was that when given the chance to keep up with the Jones’, we will. “While I am not suggesting that you should not spoil yourself from time to time, you must also know when to walk away and most importantly, know your limits in advance and accept them. It is ok to say no and decline invitations to never-ending get-togethers during the festive season.”

Shumba now uses these three strategies to ensure that his penny-pinching starts to the year are over:

1: Stop before you start

Before you get carried away with your December splurge, make sure that you have a budget prepared, know how much you can spend on your indulgences and stick to it. Check yourself before undertaking any unnecessary spending.

Always remember, that when it comes to having a good time in December, there is strength in numbers, but it is a very lonely place at the bottom when the music stops playing.

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2: Earn the right to have a good time

It is fine to have some fun, but you must earn it first. This is the basic principle of delayed gratification and planning and how you can avoid Jan-u-worry.

“I recall sitting down with a graduate many years ago when she first started working and had an opportunity to go to Thailand with her new work colleagues on a short girls’ holiday. Although she had no savings, she had a decent income, with a generous credit card limit and felt she could pay for the trip using debt, then pay off the loan gradually over the next 12 months.”

Shumba says as a financial advisor, he always considers the risks involved and given the fact that she had no savings to fall back on, maxing her credit card was a bad idea. “This was going to set the wrong habits with her finances right at the start of her career and I was against it.

“In the end, she did not go and we started a three-year goal for a holiday fund, a separate five-year goal for her house fund and a rainy-day fund for emergencies. Over a six-year period, between all three accounts, her savings swelled to over R600 000.”

She used the holiday account to fund two memorable overseas trips to Egypt and Thailand and the house fund paid for the deposit, transfers, registration costs and furniture for her brand-new apartment. Her rainy-day fund now has in excess of six-months’ worth of income in the event that she loses her job.

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3: Make a modest start

Shumba says If you are a poor saver and have tried and failed before to save, you can use psychology to help turn this around. “The key is to start with what may even be perceived as embarrassingly small amounts: savings and investment accounts can start from as low as R50 a month.

“If you want to become a better saver, but have struggled in the past, pick one thing you would like your savings to pay for in January 2025. It could be your rent, car payment, groceries or medical aid. Assuming one of these costs R4 000, you would effectively have to save around R315 a month and earn an interest rate of about 8% to have the funds to have this amount come next year. “

Although this may seem like a futile exercise, he says people who are poor savers must understand the benefit of delayed gratification, even at a micro level. You will find it easier to do it again as the financial stress no longer exists because you can pay your bills thanks to saving throughout the year.

“The fact that you are no longer hounded by your car finance company’s call centre over missing instalments during Jan-u-worry makes the sacrifice and preparation worth it. It becomes a stimulus to want to apply this to a second area because you now know that saving works.”

Now there will be no more pain or inconvenience associated with saving because saving is attached to a sense of financial freedom, Shumba says. “This is how, over time, you go from being a good saver to a great saver.

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If you do it once, you will want to do it again

“When you experience the high of reaching an achievement after saving for assets such as a house, a car, or an experience such as a holiday, you will want to repeat it in many other areas of your finances.”

He says just like exercise, once the results start to show, the so called “discomfort” of paying your instalments each month becomes a healthy addiction where the consistency will similarly take your finances to exciting heights.

“If you start now with applying these three simple strategies to managing your finances, by the beginning of next year you will breeze through the traditionally tight month and Jan-u-worry will become a thing of the past for you.”