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January can be a rather depressing month. It is often dubbed ‘Janu-worry’. This is because most of us typically worry about our finances after spending too much during the festive season.
This year we have the added burden of seeing electricity prices go up as well as, inevitably, things like food, medical aid, and certain foods.
But there are things you can do now to take the sting out of all that as well as the overindulgence of December’s festivities. Here’s how:
1. To draw up a budget
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List your expenditures and identify where you may be spending money on luxuries like take-aways, entertainment and getaways.
You could also trim your budget on things that you need to spend money on such as your cell phone bill and food.
Downshifting to a cheaper food brand or moving onto pay as you go may help you spend less. Those savings can then be put towards things that you can’t avoid spending money on but that are bound to cost more or are a drain on your finances, such as school fees and loans.
2. Share costs
Spending money on things like transport may be unavoidable – you need to get to work, right? But there are ways to save on this too. Have you thought about creating a lift club with those who take the same routes to school and work as you? If not, this could be a way of saving extra cash.
3. Save
There’s no doubt pandemic has taught us that we need to have rainy day funds at our disposal if things go wrong. According to an online poll conducted by News24 and Ipsos in 2020, more than four in ten News24 readers were severely affected by Covid-19 in terms of their finances – as many as 60% raided their savings to make ends meet.
Now is the time to try and top up your savings. You can take this one step further and create a pot for each financial goal you are trying to achieve and label it, e.g., ‘wedding’, ‘university fees’.
Nedbank’s MyPocket, for example, allows you to compartmentalise money in this way. Make use of banks’ savings calculators to help you calculate whether you’re on the right track.
If you’re bad at putting savings aside, why not consider an app like Liberty’s Stash (available on iOS and Android). It helps you to save regularly through scheduled transfers. It has recently launched a tax-free savings investment for kids so you can encourage your children to save as well.
4. Take advantage of rewards systems
Do you belong to Discovery Vitality, earn via FNB’s eBucks or are part of Momentum Multiply? If so, make sure you’re maximising the rewards and partnerships as best you can to benefit from the savings and discounts available.
5. Preserve your retirement savings
You may be tempted to dip into your retirement savings if you’re switching jobs and get a pay out from your old employer. According to Alexander Forbes Member Insights 2021 (published in October), only 9% of members preserved their retirement savings when changing jobs. Financial distress is one of the reasons, with almost 20% of millennials having loans in default.
Instead of using that cash, rather talk to a financial advisor to establish if you’re on track with your retirement savings. Reinvest that pension money. If you spend it now, remember that you’re robbing your future self!
