The economy is in a black hole. You have not been getting good salary increases or new clients for your business. Prices are escalating. Life is very expensive and our third world countries are battling with inflation. Things will not improve overnight. You might have taken on debt like a credit card, overdraft, revolving credit or personal loan.
With all of this, December is looming ahead of us and many of us are looking forward to a well-deserved rest. It is just natural to want to spoil yourself and your family with a vacation or outings or special gifts. If you have budgeted for these, it is fine. If you have not, do NOT take on new debt to finance these. This will leave you and your family with additional financial stress in January on top of a possible low or no annual increase or very quiet business.
Stress is a killer. It can increase your risk of stroke, coronary heart disease, high blood pressure, etc. It can put severe pressure on your relationships with family members. Financial mismanagement is a major cause of divorce.
Now, on this VERY negative note, what must you rather do:
- A budget has become more important than ever. Prioritize until it balances.
- The only good debt is your own property bond, a study loan to improve your income and a business loan to improve your net profit. Stay away from other debt.
- Do not borrow from your home loan to fund cars, holidays, etc.
- Get rid of all the unnecessary cards in your wallet like credit cards, garage cards, retail cards, etc.
- Join reward programmes such as Pick ‘n Pay Shopper, Clicks, E-Bucks or Wellness.
- Be bargain hunter for stuff that you truly need.
- Watch out for escalated prices over the festive season. Many items will be marked down a lot in February.
- Accumulate 6 months’ salary in a separate account or unit trust investment for emergencies.
- Investigate moving to a cheaper medical plan in November if you are healthy.
- Buy stuff cash. Cash is truly king.
- If you are sitting with bad debt, arrange with your bank for reducing limits and work yourself out of the quicksand.
- Share your budget with family members so that they can buy into your financial challenges.
- Spouses and working relatives in the same household must share the responsibility to put bread on the table. Few husbands can sponsor the whole family, put the kids through studies AND have enough for both parents for retirement. Remember, people are getting older all the time and our money might die before us.
- Get your children out of the nest timeously or they might inherit you back after your retirement. If they cannot afford to leave home, let them share the budget. If my wife brings in 30% and my working son 10% of the household income, I should only be responsible for 60% of the joint expenses.
- Start teaching your kids in primary school to budget by giving pocket money to buy what they need in terms of personal stuff. A weekly system works best in the earlier years. Responsible spending and behaviour should be rewarded. Our daughter recently had to pay the late return penalty at the local library herself out of her pocket money.
- We live in paradise. It is free of charge to visit the local beach or lagoon, cycle, jog or hike around town. This will also do wonders for your stress levels.
- Rent out spare rooms, flats or empty holiday homes.
- Travel together. Do not waste open seats. Fuel is very expensive.
- Buy your cars cash by taking out savings plans and earn the interest instead of enriching the debt providers. Einstein once said, “Compound interest is paid by those who do not understand it and earned by those who understand the eighth wonder of the world”.
- Give your car a proper service before driving long distance.
- Do not speed. It is illegal, dangerous and costly.
- Do not waste money.
- We still live in wonderful country with so much potential. Believe it. Remember our history.
Do not buy stuff that you do not really need with money that you do not really have to impress people that you do not really like…
I wish you a peaceful and moneywise festive season! Let us rest out well, reduce our financial burdens and face the challenges of 2020! Carpe diem!
E-mail: desmond.sinclair@liblink.co.za
