By Dantagos Jimmy-Melani, Ndapunikwa Investments. Photo: www.unl.edu
It is easy to get carried away with spending at the end of the year. Often we need to make an effort remember not to lose sight of our priorities. Bills still have to be paid, such as rent and utilities, so make sure that your festive season budget takes these priorities into consideration.
In this piece, we’ll deal with the best ways to plan your budgeting, saving, and spending over the holiday season – and beyond. This way you will start the New Year off on a positive note.
A golden rule to follow when it comes to holiday spending, is to avoid getting into debt for something as fleeting as a “good time”, which will foster no tangible long-term benefits for you or your family. Overspending seldom improves your life in the long run.
Many people are already in a situation where they feel overwhelmed by debt and do not know how to get themselves out of it. Debt in its simplest form, is an obligation to pay back another person or institution an amount of money that you have borrowed to finance some other expenses.
This repayment usually includes interest, which is the price you have to pay to your creditors to use money that is not your own. In this regard, interest is often referred to as the price of using someone else’s money.
Because holiday borrowing is often very short-term, and uncollateralised (meaning that no asset of value is put up as surety for this type of borrowing), it follows that the price of borrowing associated with holiday spending is usually much higher than the interest charged on longer term borrowing, such as that associated with real assets, like property.
Many people find themselves consuming more and spending beyond their means during the holidays. The reasons for this vary, from desire to show your loved ones how much you care, culture and traditions requiring a certain amount of spending or festivities during the holidays, or simply just a desire to impress other people.
This means that their lifestyle is such that they spend more money than what is actually coming in to their bank accounts, usually in a very short period of time.
The festive season can be a drain on your finances, however by putting a few financial management strategies in place early in the year, you can improve your chances of getting through December and January with your budget intact.
Setting a budget for your gift giving and entertainment during the festive season can help you to better plan your finances and control end-of-year spending.
You can do this by making a list of all the people you plan to buy gifts for, and all the activities that you plan to do with your family and friends over the holiday season. Once you have identified these items, determine a spending limit for each activity, for example how much you will spend on petrol to travel to the farm with your family, how much you will spend on food, etcetera.
If these items exceed the amount you have available, have another look at the items and see where you can reduce expenses. Choose gifts for loved ones that allow you to stay within your means, and shop around for festive season sales that allow you to save on items such as food and refreshments.
It is also important to start your planning and saving early in the year so that you do not have to spend your whole salary check and bonus during December.
A big holiday doesn’t always have to be big deal money wise. It’s important to find meaningful ways to engage with your friends and family that do not require huge financial displays of affection.
After all, it’s much more important to get through rest of the year with your piece of mind, and your wallet intact.
For more information on Financial Planning, Investments, Health, Business and Financial Tools visit www.ndapunikwa.com today!