Plan your holiday spend for a debt-free January
By Haley Parry, Money Coach and Facilitator of 1Life’s Truth About Money initiative
Don’t let the fun festive times be financially ruinous. Budget for your December and January expenses and you’ll start the new year with fewer financial worries.
Festive season spending can easily run away with you. It’s tough to tighten the belt at this time of year – and that’s not just because of what’s on the dinner table! Here are some great tips if you want more control over your end-of-year spending.
They are, after all, just months of the year. Keep that in mind and stick to the good financial principles of budgeting for your income and expenses, keeping to your budget and avoiding unnecessary debt.
Budget for your expenses
Work out what you are going to spend over December and January. Include the regular items that you spend on every month as well as extra expenses such as holidays, special meals and gifts as well as back-to-school expenses in January.
Regular items are monthly expenses such as home loans, car payments, insurance and utilities. Put these costs in your budget first and pay them as soon as you can. Don’t forget to budget for any new year increases in medical aid, gym fees and school fees.
When you’re budgeting for extras be frugal, but also realistic. Frugal means not overspending, but it doesn’t mean you can’t have any fun.
Manage your pay checks
Once your budget is set; you need to stick to it. The first step is to manage your paychecks.
This needs to cover regular monthly spend in December, including all the debit orders that go off your account at the beginning of the month, plus end-of-year costs such as entertaining, holiday spend, family celebrations and gifts. Budget for this paychecks to last 31 days – to the end of December.
This paychecks needs to see you through to the end of January (31 days) and will need to pay for all your regular spend and any back-to-school (or tech or university) items.
If your company pays December salaries early, it might be an idea to transfer your salary out of your current account into your savings account, so you aren’t tempted to use it. Move the money back before your debit orders are due. And whatever you do, don’t dip into January’s salary in advance to pay for your December fun.
Recognise the cues that encourage overspending in December
In addition to paying close attention to your budget, think about what makes you spend, or spend more, at the end of the year.
These are very rarely once in a lifetime. Avoid them unless they offer a deal on something in your budget that you would need to buy anyway.
Peer pressure and tradition
We can put too much pressure on ourselves to do things the way they’ve always been done, no matter what the cost. If tradition costs too much, maybe it needs to change. Chat with your friends and family about ways of celebrating without overspending.
Stick to your budget
We’ve found these tips to help you stick to your budget:
* Spend only cash. Leave your cards at home and only make one cash withdrawal to avoid high bank charges.
* Set daily limits on your debit and credit cards so you can only spend that amount.
* Include your family in your budget discussions. Show them the benefits of sticking to a budget – for instance, there will be money for school items in January.
* Use any loyalty points or rewards you have accumulated in the year, so you spend less cash.
* Always make a shopping list before you go to the shops.
* Consult your budget regularly – tick off items when you have bought or paid for them.
* Don’t dwell on what others are spending and buying. They may well be spending on credit!
Make budgeting for the festive season fun!
Budgeting requires discipline, but don’t look at your budget with a feeling of gloom. Rather see it as a puzzle you can solve. Every family member has a piece of that puzzle to make it a really good budget, and to stick to it. And when you’ve solved the puzzle, you have achieved something good!
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