Christmas and the New Year celebrations are around the corner and many of us are already making big, small and medium-size plans on how to celebrate. While some have the financial power to bankroll parties, getaways and travels, many others are not so lucky. They have to struggle to fit as many expenses as possible into a meagre budget. That’s why they are tempted to overspend, albeit unnecessarily.
It’s interesting how some of us seem to get lost in the euphoria of the celebrations that we forget that there is life after the Yuletide. Point of correction – we don’t forget, we just intentionally blank out the voice of reason and spend our lives away.
Some even go as far as taking loans just to impress family and friends, whom they probably haven’t seen since last Christmas. Then, reality sets in by January and they become stranded and continue the cycle of struggling throughout the year. Sorry to burst your bubble, this behaviour is financial recklessness on steroids.
Whether you are an employee, entrepreneur or aspiring to be one, the year 2020 should have taught everyone the importance of being financially responsible – to save for the rainy day, because that day always comes.
So, how can we avoid making the same mistakes we made last year that left us with regrets? How do we make sure we don’t overspend on shopping, gifts and other things? Here are 7 ideas that will help.
1. Accept you can’t please everyone
It all starts with us trying to make everyone feel happy and ensuring that our family and friends are well taken care of during the festive period. While that is noble, know that you can’t solve everyone’s problem. Also, don’t spend to show-off or compare yourself with another person, the other person may be spending his or her extra cash while you’re depleting your treasury. Resist that urge. Be wise.
2. Stash money away
Make a list of your bills and expenses (including incurred loans) for at least, the first quarter of 2021 and allocate funds accordingly. Make sure you don’t have outstanding bills for the outgoing year (2020). Plus, DO NOT borrow money to fund the festivities. Don’t. After allocating the funds, move the monies to a bank account you don’t have an ATM for. Make sure you’d need to enter the banking hall before you can have access to it. Better still, authorise your bank to put an embargo on it for a certain period.
Then, invest at least 20% of whatever money is left in your savings in the money market instruments. These are short-term investment opportunities that can be easily converted to cash in a short amount of time. That said, you can plan with the rest of the money you have in your savings, but don’t spend it all. Always resist that urge.
3. Set a budget
To begin, make a list of your priority spending. Expenses such as buying gifts for your parents, siblings, valuable friends and associates. If you’re from a family that organises an end-of-the-year party, make this year’s event less elaborate to save money and you could share the expenses with your siblings or relatives. In a nutshell, don’t spend sentimentally and impulsively. If you have to set a reminder on your phone that pops up every 10-minute with an inscription that says ‘you’re broke’, do that. This is important because its easy to be carried away during this period.
4. Have the cash you need in hand
Having drawn your budget, which should not be more than 50% of what is left in your savings after moving the important funds, withdraw the cash and a little extra as pocket money. Let it always sink in that the 50% left in your account isn’t for spending. Do whatever you have to do to make sure you have no reason to make more withdrawals. Most of the expenses during the holiday season are “convenience” costs and you have to remind yourself that you need to inconvenience yourself this time for the greater good.
5. Track your spending
It is important to pursue due diligence to achieve success in anything. To hold yourself accountable during the holiday season, you should always take note of your daily spending. You can do it on your phone or get a jotter and pen, where you’ll write the items you spend money on for each day and compare it with the budget you created to be sure you’re on track. Anywhere you find lapses, fix it and make sure it doesn’t happen again. It may seem like you are being too hard on yourself, remind yourself that you’re sowing now and you will reap a bountiful harvest in January 2021.
This list was drawn with a mid-income earner in mind, but the principles apply to everyone who earns money. Depending on your income size, implement these ideas accordingly and without sentiments. You will thank yourself for it in January.
Business Elites Africa is thrilled to announce the release of its exclusive special editio…