The festive season is upon us and January seems very far away, however so is the next pay day.
For most people, employers pay their employees a few weeks early in December, which may seem like an early holiday gift at the time, but can end up being a very long stretch to your salary in January.
In order not to get a big financial fright in January you need to have a plan in place for when the New Year comes around. “This time of year we are often lulled into a false sense of security when it comes to our finances, says Eunice Sibiya, Head of Consumer Education at FNB. “Many people make the mistake of spending money that they don’t have and then getting a big shock in January when payments and expenses are due.” One of the reasons that people feel they have more money than they actually do is because their salary is paid early in December plus a bonus for some. “Most employees are paid early in December and because it has been a short month from November to December, with only a few weeks between pay days, people often feel cash flush and become price insensitive, which means that they are not conscious of the price of goods during this season as they usually would be during the year,” says Eunice. “However, there is now a full six weeks before the next pay day with some big expenses due before the next salary.”
In order to make sure you aren’t in for a nasty surprise and start the New Year in debt, you need to plan for the pay day drought. “Be aware of unplanned spending during this season, usually on entertainment, going out far more than you usually would during the year, gifts for family and friends as well as unplanned trips,” says Sibiya. “All of these things add up notwithstanding it being a time for family and friends.” Be price sensitive “Don’t fall into the trap of not looking carefully at the price. Be strict and ask yourself if you would usually buy something like this or go out every night of the week,” says Sibiya. “A lot of the time your spending is unnecessary, often driven by the festive spending mood.” Make sure that you look ahead “You need to think ahead, look at your expenses and what is going to be due in January, for most people this is the start of school and back to work,” says Sibiya.
For the new school year start looking out now for the stationary list and what uniforms are needed so you can budget and plan for this or start buying now. “Also think of everyday costs that you will have to pay before the next salary is in – money for groceries, electricity, rent or bond and travel to work,” says Sibiya. “You need to make sure that you have enough money in your bank account to ensure that these everyday expenses suddenly don’t become debt.”
Planning now for New Year expenses will mean that you don’t start off the year on the wrong financial foot. Instead, use some of your bonus to pay off some of your debt and reduce your debt load. Turn Janu-worry into Janu-joy.
For more information contact: Chloe Webb Tel: 087 3119124 Mobile: 0833050144; Email: cwebb@fnb.co.za
