Avoid Skhothane tendencies, be moneywise

However, wasting your extra cash on flashy lifestyle over the holiday period could, on the one hand, leave you destitute in January. On the other, using your year-end bonus wisely could help you to take charge of your finances by starting the New Year on a solid financial footing.

Also read: How to save money on back -to-school supplies

John Manyike, head of Old Mutual’s Financial Education says: “Too often people use up their entire year-end bonus during the December holiday when it’s tempting to spend on gifts, clothing and eating out. It is unfortunately also around this time you find out that your year-end bonus doesn’t get you very far if you spend it this way.”

To avoid reckless spending over the festive season, consumers will have to understand the following points:

• Why it is vital not to be a Skhothane with your year-end bonus.

• How a year-end bonus can be used to build a solid financial base.

“Also know, understand and respect the six steps and get the maximum out of your year-end bonus.

“It is often tempting to satisfy the desires of the ‘inner Skhothane in you’with your bonus, especially after a year of hard work. However, if you waste your extra cash on flashy ‘nice-to-haves’, you might just regret it come January,” says Manyike.

Also read: Spend your year-end bonus wisely

Manyike offers the six steps to help you maximise your year-end bonus.

• Spoil yourself modestly.

Your bonus is your reward for working hard throughout the year, so it’s okay to spoil yourself a little, but only after you have taken care of your main monthly financial obligations. Draw up a budget and stick to it.

• Payback any personal loans.

Personal loans have some of the highest interest rates around, so jump at the chance to pay them off early with your extra money. Not only will you save a lot of money on the interest that you would otherwise have to pay, but it will also ensure you have more money in your account every month in 2019.

• Attend to your arrears this festive season and avoid entertaining yourself with plastic money

Use your bonus to pay off any outstanding credit card or store card debt. This will boost your credit score. If you are not careful, you will be paying off your festive season fun well into the New Year. Try not to enjoy your December on credit.

• Set aside a portion for all those back-to-school expenses.

Allocate a portion of your year-end bonus to back-to-school expenses. Try to make the necessary annual stationery and school uniform purchases during the festive season. By doing this you will give your finances a head-start for the New Year.

• Put a little extra into your retirement savings.

If you have not reached the maximum annual tax-deductible contribution limits on your retirement annuity, call your financial adviser and arrange to pay a little extra into your retirement annuity. The advantage of paying more into your retirement savings is that you can claim a portion of that back from Sars (SA Revenue Service) at the end of the financial year.

Also read:Become a better saver – top five savings tips

• Start a savings fund or emergency fund.

Whether your goal is to save for your children’s education, an emergency expense, or a deposit for a new home, now is the time to get that savings fund off to a strong start. Consult your financial adviser to explore your options and find the best way to boost your savings goals through an instrument that offers good returns.

“A year-end bonus is your reward for the hard work that you put in every month. Working a little smarter with this reward at the end of the year will ensure that it just keeps on giving,” Manyike concludes.

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