How to avoid financial hangover every January
As the festive season has come and gone, a number of consumers are conducting a postmortem into whether they spent their funds wisely.
This bean-counting process could turn out to be humbling, especially for those who spent December being generous with their cash, as if they had forgotten that their free-handedness would come back to haunt them this month.
The sobering experience of running out of cash and being broke weeks before the January payday should be viewed as an opportunity for individuals to want to manage their finances better this year.
The festive season is a period where family members and friends, who hardly converge regularly throughout the year due to hectic schedules, come together to relax and have a good time.
Because of the amount of time spent at home, holiday destinations and drinking holes, December always sees spending skyrocket.
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It is also a time when many income earners buy presents for family members.
The income earners also experience societal pressure as they are expected to fork out what could be termed as "Christmas tax" by buying goods for extended family and friends with limited financial means.
This is the reason why those with a predictable source of income should make saving for December their annual New Year's resolution and, eventually over the years, their financial management culture with an aim to make every January "broke-proof".
However, saving during the year comes with its own challenges because there are always primary and secondary interests that compete for your cash, like paying the excess following a car accident, a burst geyser and other unexpected expenses relating to home maintenance, for instance.
This is why forming part of a savings club, like a stokvel, in January could be one way of ensuring that you put away cash every month throughout the year and only access it in December.
The good thing about a stokvel is that it has rules that serve to inadvertently and indirectly apply some form of peer pressure on members who are unable to stump up their contributions when the going gets tough.
I've heard stories of how members had to borrow cash to avoid falling behind in their stokvel contributions.
We should also be wise during December and try our utmost not to spend money on non-essentials.
The chief executive of Cash Converters, Richard Mukheibir, quotes a recent festive season spending survey conducted by global accountancy firm Deloitte, which found that gifts represent only one-third of the average holiday spend.
"In fact, the bulk of spending over this period is related to sprucing up your wardrobe and your home, entertaining at home and socialising outside the home," he said.
"It is easy to underestimate how much these extras will add up to and play havoc with our New Year budgets."