How to survive January financially

Few consumers started the new year with a clean financial slate but there is still hope for consumers who overspent during the festive season.

You can stretch you January budget to survive financially and then consider making some New Year’s resolution that will actually pay off.

It is not only the overspending during December that hit consumers hard, but also the new year expenses, such as school fees, uniforms and books that weigh down their regular budgets.

Most consumers also received their December salaries in the middle of December, while others such as contractors and freelancers had a break in income. It can seem very difficult to survive January financially.

However, it does not have to be that bad. Ester Ochse, product head at FNB Integrated Advice, says you can plan to stretch out every rand and get the year off to a good start at the same time by using your rewards, maxing out your freebies, getting into good financial habits, finding specials and reviewing your subscriptions and memberships.

Using your rewards

Ochse says now is the best time to use your rewards and loyalty programmes, such as eBucks that normally pay out around the second week of January, making it is the perfect time to take advantage of the extra boost in cash flow.

“Spend your rewards on essentials rather than treats. For example, with eBucks you can buy Checkers vouchers on the app and you can pay for some essential purchases, such as fuel or banking fees. This will immediately free up extra cash to soften the long January drought.”

ALSO READ: 2023 was a battle for survival for South Africans

Maxing out your freebies

Continuing the rewards programme theme, many rewards programmes offer freebies as incentives and they are awarded throughout the month. Use these to the max, Ochse says.

“On the FNB app these include free Starbucks and Kauai vouchers, as well as Wimpy burgers. If you attempt to use all these freebies, they will quickly add up and are a nice treat when your budget is very stretched.”

Getting into good financial habits

The start of the new year always comes with new year’s resolutions. “This is the best time to include your financial wellbeing in your new year’s resolutions. For example, this can be prepping meals instead of buying at the office every day. Even small changes make a big difference.”

Have a look at your budget, either by using pen and paper or use an app to see where you can cut down on or even cut out unnecessary spending.

Looking out for specials

Most retailers offer specials at the end of the festive season and you can pick up a few good bargains to help you survive January financially.

“Use specials for essentials and try to change your spending habits to get more bang for your buck,” Ochse suggests.

Reviewing your subscriptions and memberships

She says the new year is the perfect time to assess all your subscriptions and memberships that automatically roll out of your account monthly.

“You do not even need to cancel all of them. You could pause a subscription for the month just to free up a bit of extra money. Once you have done without it for the month, assess whether you use it enough.”

ALSO READ: Consumers and credit a mixed bag in third quarter

Turn your new year’s resolutions into action and have a prosperous 2024

John Manyike, head of financial education at Old Mutual, says creating a list of new year’s resolutions is a common approach to improve your life for the year ahead, although resolutions can be challenging due to our tendency to set overly rigid rules for ourselves.

“We often adhere to these resolutions briefly before reverting to old habits but keeping your financial resolutions simple and having as few as possible makes success possible.” 

He says there are five fundamental financial planning strategies that can have a profound impact on your life and incorporating these principles into your resolutions can make 2024 a significantly smoother year and help you to survive January financially.

Resolution #1: Reduce spending and increase your savings 

Manyike says a budget is essential for achieving this goal and adopting the 50:30:20 budget strategy can be an effective approach. This means you allocate:

• 50% of your income to Needs: This portion covers essential and fixed expenses.
• 30% to Wants: This portion focuses on non-essential lifestyle spending.
• 20% to Savings: This portion helps build a financial buffer for the future and supports your financial goals.

Using this guideline as a framework and adjusting the ratios as needed can help you stay on track.

“While it may seem daunting to reduce spending, you can do it by identifying and eliminating small, everyday expenses that often go unnoticed. By tracking your daily spending patterns, you will be surprised to discover that these seemingly insignificant purchases add up to a substantial amount over time.”

He says for example, if you spend R30 on small items every day, it translates to R150 per week, R600 per month and a staggering R6 600 annually. By identifying and eliminating these unnecessary expenses, you can improve your financial wellbeing.

ALSO READ: South African households increasingly less well off – Reserve Bank

Resolution #2: Reduce your debt

Start by understanding your spending patterns and identifying areas where you can cut back, such as:

• Unnecessary accounts:  Cancel credit cards and store cards that are not essential for your daily purchases if you struggle with discipline. This will help you to avoid impulsive spending and stay focused on your debt repayment goals.
• Prioritising high-interest debt: Create a list of your debts, starting with those with high interest, such as credit cards. Allocate extra funds to pay off these high-interest debts first. As you settle each debt, you will free up more money to tackle the remaining ones.
• Not paying for entertainment with credit.
• Considering debt consolidation: If your debt is substantial, explore debt consolidation options with your lender. This can simplify your repayment process and potentially lower your overall interest rate. But remember, debt consolidation is not a licence to increase spending or take on new debts. Close unnecessary accounts, avoid impulsive spending and stay committed to your budget.
• Find professional guidance if you are overwhelmed by your debts. A qualified debt counsellor can provide personalized guidance and support to help you develop a manageable debt repayment plan.

ALSO READ: SA consumers battling to pay their home loans and credit cards

Resolution #3: Distinguish between what you want and what you need

Recognise that what you desire may not always be essential. For instance, you may need a car for transport, but the top of the range model might be a want rather than a need, Manyike says. By opting for a more affordable model or considering a used car, you can save a lot of money.

“Buying luxury retail items on instalment plans can be a costly exercise, especially with interest rates hovering around 21%. Consider saving for desired items instead. You may often find that the desire for the item diminishes once you saved enough to pay cash.” 

Resolution #4: If an investment is too good to be true, it is

Manyike says the fundamental principle of financial management is that if an offer appears too good to be true, it likely is.

“It is unfortunate that people seeking financial success often fall prey to unrealistic promises that lead to disappointment. Steer clear of any investment scheme that offers abnormally high interest rates or unrealistic returns on your money. Rather stick to reputable financial institutions for your investments.”

Resolution #5: Find a trusted financial adviser

“As we transition through life’s stages, from our first jobs to retirement, having a trusted financial adviser can be invaluable. Their expertise can guide you in structuring savings, investments and long-term financial planning, ensuring you build a lasting legacy for your family,” he says.

“As with all financial endeavours, swiftly translating your resolutions into action is the cornerstone of achieving prosperity.”