For many of us, the start of a new year is a stressful financial period after the expense of enjoying the festive season. For this reason, the term ‘Januworry’ has only become more popular!
While December can be a difficult month to manage financially, there are several practical things you can do to help manage your cash flow, identify investment opportunities, and potentially save more money for your future.
Save or invest your bonus
If you receive a 13th cheque or another form of bonus at the end of the year, it can be tempting to use that money towards purchases to spoil yourself or others. In fact, our 2019 Festive Spending Survey found that most South Africans use their 13th cheque or bonus to buy gifts and manage festive expenses over the holiday season!
However, if you are able to, saving or investing your bonus at the end of the year can be a powerful way to secure additional interest (and potentially income) going forward.
If you have access to a high-interest savings account, many banks may allow you to ‘lock up’ your savings over a certain period. Although you would not be able to access your funds over the duration of this period, you will benefit from a higher interest rate and will earn more money through interest in the long term. Doing this can also be a great way to resist the temptation of spending this money on festive expenses.
You may also be able to start a new investment or add to an existing one with this figure, which can help secure your future, retirement, and potentially generate additional monthly income through interest. A licensed financial advisor can help you begin a new investment, or provide suggestions as to where you could alternatively save or invest your 13th cheque or bonus.
If you feel pressured to spend this money upfront, it’s worthwhile to read our article on what you need to consider before spending your 13th cheque.
Use cash instead of your credit card
Using your credit card to buy expensive gifts or to manage your cash flow can be appealing, especially if you don’t have the money at-hand. However, most credit cards are only interest-free for 55 days. If for example, you buy gifts at the start of December, you’ll begin paying additional interest in January if you’re unable to make a minimum payment on your outstanding balance by then.
This is an easy trap to fall into, and can see you fall short of your January budget. Instead of using your credit card, rather opt to use cash – and follow the rule that if you can’t afford to buy an item that’s a definite want outright with cash, you should rather not buy it at all.
By using cash, you save on interest and any fees, and you will be able to re-evaluate whether certain purchases are worth the expense to begin with.
Renegotiate your contracts
If you have existing contracts such as a gym membership, app subscriptions, or perhaps another form of service agreement, most contracts will either renew on the date when you first signed, or at the start of the year. This means that often our January budgets don’t take into account a 10% yearly increase in the average contract price, and can fall short of what we might end up paying.
Though it’s not always feasible to cancel contracts at the outset, you can always opt to renegotiate the terms of the contracts you’ve signed. For example, you could opt to downgrade to a more cost-effective medical aid plan if you’re generally a healthy person, or you might opt not to renew your cellphone contract and take out a new phone if you find you don’t need one.
Keeping an eye on your contracts and their monthly expenses can help you identify not only what services or contracts you really need or find valuable, but can also assist you in re-evaluating if you really need to make use of that service in the first place.
Get a ‘checkmate’
Do you often find it difficult to avoid buying into tempting deals, splurging out on big events, or otherwise waiting to see if you can’t find an important purchase at a more affordable price elsewhere? Using the ‘checkmate’ system can be a useful method to manage your spending.
The ‘checkmate’ system is where you invite a friend, your partner, or a family member to be a source of approval, thought, or recommendation before you commit to a large expense. If you feel unsure about whether you can afford to make a certain purchase or if buying a particular item might influence your cash flow, having a ‘checkmate’ can be a useful way to sense-check your financial decisions.
The person you decide to be your ‘checkmate’ can simply provide their thoughts on large purchases, or can help you find an alternative or more affordable purchase elsewhere. Though your decisions and priorities are your own to manage, having to run your financial decisions and opinions past another person can help you decide whether you really want to commit to a purchase in the long-run.
Revisit your previous payment/banking transaction history
December and January often invite additional spending and expenses into our lives – but the good news is it is possible to look back and see where things went wrong by checking your banking transaction or payment history.
If your previous December and January budget didn’t go according to plan or you found that you ran out of money halfway through the month, it’s worthwhile to download your banking history and compare what you actually spend to what you estimated in your budget. By tallying up your monthly expenses and seeing what you really paid, you get a better idea of how you can manage your cash flow going forward.
You can use your banking transaction history to see which items you could have spent less on, or found more affordably elsewhere – giving you a great start to find practical savings tips to practice throughout the new year.
Lastly, you can also use it as a game plan; if you know that you’ll need to purchase items like school uniforms or other goods in the New Year, purchasing them early in December can help you prioritise funds for what you’ll really need. Purchasing groceries in bulk in December can also be useful to tide your expenses through January.
Start your own vegetable garden
Whether you have a garden or not, and quite a lot of sunlight, it’s highly possible and beneficial to grow your own vegetables and herbs. If you aren’t in the position to start a garden, you can start a veg box on your balcony or outside your back door. Not all vegetables require large amounts of sunlight. Root vegetables and spinach can grow in partially shaded areas.
Make use of loyalty or rewards programmes
Most stores these days have loyalty/rewards programmes that we should all be taking advantage of. Below is a list of some of the bigger grocers in South Africa who offer these programmes:
- Woolworths – the MySchool and Woolworths cards offers an instant 10% off on selected items when swiped.
- Checkers – the XtraSavings card offers instant cash discounts on selected items
- Pick n Pay – the SmartShopper card allows you to earn points every time you swipe it at check out. Points can be earned at PnP’s partners’ stores as well. Points can also be exchanged at these partners’ stores for various monetary values.
- Spar – the Spar rewards card allows you to earn instant cash discounts on selected items.