A financial plan is your map to achieving your financial goals. These could include education for your children, building a house, starting a business or, securing an asset. The risk of not having a financial plan is that you will most likely never achieve your financial goals. Many people think that if you are under debt counselling, you don’t need a financial plan. This could not be further from the truth. If you have chosen debt counselling as a debt management solution, you most definitely need a financial plan to build a brighter future for yourself. Without a financial plan, you may find yourself back in debt because you neglected to plan for future risks. The risk of not having a financial plan as part of your debt solution can be costly.
3 December 2014
Festive Season Financial Survival Guide
“We wish you a Merry Christmas” was presumably the music you heard playing in one of your local shopping markets in early October. You most likely felt a sense of uneasiness because you quickly remembered the financial implications that tag along with the festive season.
To certify that you make it out ‘alive’ at the end of the festive season and to avoid suffering from the January ‘financial blues’, follow these festive season financial tips to guide you into the new year.
1.Forecast for the festive season
The first thing you need to do when gearing up for the festive season is plan ahead. Draw up a schedule and save in advance so you effectively manage your time, as well as your funds. The last thing you want to do is over-commit yourself without funds, leaving you in debt.
2.Build a Budget
It may sound like a novel concept, but build a budget specifically for the festive season to help you manage your finances.
A budget is a breakdown of your income and expenses. It helps you to plan for the month ahead and by sticking to it, it helps prevent you from spending more than you earn each month.
You can do this by listing all sources on income, including a 13th cheque you may be lucky enough to receive in December.
Consider all of your expenses, both necessities and luxuries. The festive season often comes with an array of new expenses such as, gifts, holiday expenses, travelling costs and the costs associated with festive season feasts.
Don’t forget to total your income and expenses. If your income exceeds your expenses, you will need to cut down on expenses.
Make sure you are aware of all of the cost implications associated with the activities you want to engage in over this period, and only follow through with them if your budget allows you to.
Over the festive season, keep a record of your purchases and stay on track with your budget.
3.Spend your 13th cheque wisely
It is vital that you spend your 13th cheque wisely by assessing all of your options;
- Ditch your debt: Use your 13th cheque to settle any outstanding bills or overdue debt repayments, such as medical bills, school fees or even your hefty outstanding credit card balance. Prioritise your debts by paying off your debt with high interests rates attached first.
- Salvage your savings: If you have struggled to keep up to date with your savings plan or if you have missed your savings goals throughout the year, now is the time to use your bonus wisely and get your savings back on track. Alternatively, put your 13th cheque into a savings account or boost your retirement annuity
- Plan for January: Car services, university or school fees, increased petrol prices and inflated grocery prices can increase your monthly monetary requirements in 2015. Use your 13th cheque towards your January expenses.
4. Save cents on Christmas presents
It is part and parcel of the festive season that gifts are shared among family and friends. This can be a costly exercise that can have big implications on your budget. Avoid busting your budget or entering into the new year with debt by;
- Drawing up a list of recipients of gifts: This will allow you to decipher how many gifts you need to purchase
- Analysing your budget: Determine how much money you have available to buy those gifts
- Purchasing only what you can afford: Do not spend more than your budget allows you to
- Avoiding credit: Purchase items with cash only
- Purchasing gifts in advance: Buying gifts in advance will allow you to shop around and compare prices. Websites like kalahari.com or bidorbuy.co.za offer Christmas specials and allow you to save
- Getting creative: Play ‘Secret Santa’ with family members or make ‘DIY’ gifts or baked goods to save money
5. Hold off on a holiday
It is tempting to plan an elaborate holiday that you can’t quite afford and simply pay for it on credit, leaving the costs to be dealt with a later stage. If you intend on going away you need to plan one year in advance to ensure that you save enough money to afford it. Select a holiday getaway, calculate the cost and start saving towards this holiday. You will benefit from cheaper flights and discounts if the holiday is planned and paid for in advance.
6. Fun frugal festivities
Aside from a free end of year office party, you will most likely be invited to attend various festive feasts and parties over the season, which come with a price tag. To ensure that you party like a pro, only use the money that is left over after paying for all your household necessities.
- Only accept an invite if you can afford to attend. Once you have paid for all of your necessities, purchased gifts and have paid for other festive season expenses, go out and spoil yourself if you have money left over
- Leave your credit card at home and only take cash
- Car pool or share a taxi with a friend who lives close by to save fuel costs
- Find alternative cost-effective fun activities to partake in, such as a picnic on the beach, hike up the mountain or a sunset stroll along the promenade.
- Once your cash runs out, it is an indication that it is time to stay at home. Use this time to reflect and perhaps set a few savings goals for the upcoming year.
7.Fix your finances
If you are struggling to manage your finances or make ends meet, act now before it’s too late. Speak to credit providers to renegotiate interest rates on your accounts, build a budget focussed on eradicating your debt or SMS ‘festive finances’ to 47546 for DebtBusters, the award winning Debt Counselling Company, to help turn your finances around.
Author: Zandile Ramalohlanye (DebtBusters Financial Consultant)