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The last quarter of the year is often a time to reflect, relax and take it easy after a long year. It’s the time you spend with your loved ones and perhaps take a shot’ left with your family. All these are necessary for your quality of life, but it can come with a high price tag if you don’t plan well, leaving you with the Janu-worry blues. That is why it is important to build an emergency fund or a buffer for January 2020, well ahead of time.
This means that you have to plan thoroughly, even before you receive your salary. Consider all the important debit orders that need to go off your account and put the money aside.
To ensure that you will not be dipping into your regular instalments, like your bond, car etc, it helps to create a separate account. Call it the ‘Fun Money’ Account, if you want. Here, you can transfer all the money you are going to need for festivities. Once the funds in this account start to run low, you know that it is time to take it easy and not spend as much.
Money is still a topic most families are not comfortable discussing, but it is important that we do. Talking about money allows us to align our expectations and set boundaries. Failing to do so often leads to awkward situations and bad blood.
Going into the last quarter of the year, sit down as a family and agree on a budget in advance for the festive season. Draw up a plan of activities you want to do, the days on which you will eat take-out, etc. This way, you can hold one another accountable to the plan.
If you are one of the lucky ones receiving a bonus this year, don’t blow it all on the holidays. It’s never an easy temptation to ignore, but by putting a percentage of it away, you will create a safety net for that long January month. Calculate how much all your major expenses will cost, then stash those funds away in a Savings Pocket for the January debit order run.
The envelope system is one of the best ways to budget, especially around the festive holidays. You use cold hard cash to control your spending and, when you run out, you stop spending.
Say, for example, after sitting down with your family, your estimated spending comes to R10 000 for the family holiday. You can break it down per week, where every week will cost you about R2 000. Every week, draw R2 000 and put it in an envelope to cover that week’s spending. Once the money runs out, you can’t spend a cent more. Fight the temptation to dip into the next week’s allotment if you run out too early. The sooner you spend that cash, the shorter your holiday will be.
There is also something profound in using hard cash instead of ‘plastic’ money! It means you see every Rand as it leaves your envelope. Trust me, it changes your behaviour!
There are many ways to build a buffer to avoid the ‘January 2020 hangover’, but all of those options require planning. If done right, this festive season will be a holiday to remember!
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